CONTENTS
LETTER
ISSUE CONTENTS
4 October 2012
FROM THE
EDITOR
M
MONEYLIFE | 4 October 2012 | 10
MUTUAL FUNDS POINTERS
Coal & Iron-Ore Mines: Greedy FIIs Ignored Governance Issues; Verghese Kurien: The Original Social Entrepreneur; The Amul Moppet: Utterly Butterly Legendary; FII Investment: Genuine Money or Election Funds?
Tune Out the Noise edia reports pronouncing the ‘Death of Equities’—the view that stocks are no longer a smart asset class to invest in—have become common. Where does this come from? From the media’s limited understanding of the equity market. It is in the nature of equities to rise in spurts and move sideways for long periods. But the popular media want to report on surging or crashing markets. And they want to report on one other thing—a decline on point-to-point basis which proves that equities are unreliable for wealth creation. Since major global indices have not risen over the past 10 years and Indian indices have been stagnant for the past five years, we are hearing once again stories of death of equities. Investors believe this because they don’t know any better. How should you deal with this? Turn to page 32 for the right perspective. On a similar note, we have read stories about actively managed mutual funds constantly lagging behind their passive or index fund peers in the US, while they charge huge fees. In our Fund Pointer section, we look at the Indian experience which happens to be different from the American one. In her Different Strokes section, Sucheta Dalal talks about the dubious Sahara group, the implications of the Supreme Court’s landmark judgement, and why the mainstream media have conveniently chosen not to cover the story. We have added a new sub-section “Global Learning” to the Earning Curve section, where we focus on regulation, behavioural patterns, malpractices and such topics as we think will be relevant to the Indian investor. Check out page 58 and do let us know your reactions. Our flagship seminar in Pune was very well received, with a lot positive feedback. We will upload the video of the event shortly. For the first time ever, we will be stepping into God’s Own Country and hosting a seminar in Kochi on 6th October. Do register soon as only limited seats are available! As always, we are committed to spreading awareness and are open to new ideas. Do write in with your considered suggestions.
18
TRAVEL
22 Get Active
54 Alaska on a Cruise
Actively managed schemes have done better than passively managed ones
Alaska is one of the top travel destinations with many attractions, including a cruise ship, finds Jaideep Mukerji
SMART MONEY DIFFERENT STROKES
20 32 Cover Story Death of the Equity Cult? For the past five years, the Indian market has given no returns. Markets in many countries are negative over a decade or more. What to make of this? Turning your back on stocks would be a mistake. Debashis Basu with Jason Monteiro explains how you should really invest
13 Your Interest SC refuses to frame guidelines for reporting court proceedings; Mobile radiation: Use headsets or speaker phone as precaution; Petrol costlier in India than in US, Pakistan and Sri Lanka; Migration from RInfra to Tata Power will reduce monthly bills: MERC
14 Your Money
The Importance of the SC Ruling on Sahara India
The Supreme Court's ruling on Sahara India was path-breaking but can SEBI drive home the advantage?
STOCKS
26 Which Way A decade ago, Ben Bernanke had warned of his main weapon—the dollar printing press. In mid-September 2012, he talked of keeping it humming as long as it takes
27 Popular Picks Good, but Overpriced
30 Value Picks Limited Options
40 Street Beat
16 Current Account
STOCK PERFORMANCE: Smooth Sailing
– Suprajit Engineering – Relaxo Footwears
Currency Forecasting: Gisele Bundchen’s Bet
17
Moneylife Quiz; Sound Bites: Ray Dalio, founder of the hedgefund giant Bridgewater Associates; J Hari Narayan, chairman, IRDA; D Subbarao, governor, RBI; Markandey Katju, Press Council of India chairman Disclaimer: Moneylife has a policy of not allowing its editorial staff to buy and sell stocks that are written about in the magazine. All personal transactions in individual stocks are subjected to internal disclosure rules.
RBI seems to be ignoring the massive systemic risks of non-banking financial companies. Retail investors must stay away from them
INSURANCE
LEGALLY SPEAKING
the Supreme 57 What Court Hinted Clearly, the Supreme Court has serious doubts about the genuineness of the tall claims made by the Sahara companies EARNING CURVE
46 Insurance Trends
Rating: 58 Fund Flawed Metrics
– Health Insurance: ICICI Lombard Complete – Annuity: Jeevan Akshay VI Online – ULIP: HDFC Life ‘Invest Wise’ – Car Insurance: Policy on the Go
Global Learning : Studies, surveys, regulation, misconduct and savers’ behaviour from around the world ML FOUNDATION EVENTS
Credit Cards: Rupay Cards To Be Acceptable at All PoS Terminals; SEBI: Investor Website in 13 Indian Languages; Banks: ICICI Bank Hikes Overseas ATM Cash Withdrawal Fee; SBI Cuts Fixed Deposit Rates; Currency: RBI Not To Blame; Cheques: Uniform Features on the Way; Mobile Wallet: Not for Now
Loose Change
39
Risks with NBFCs
SPENDING - AIR TRAVEL
48 Travel Upfront Travelling business class is not as expensive as you think, sometimes!
45 Long Term eClerx Services rose 17%, Wyeth rose 5%, while Jindal Steel & Power fell 3%
Moneylife Foundation conducted its flagship “How to be Safe and Smart with Your Money” seminar for the fourth time in Pune
AUTO
Drive: 50 Test Tata Nano Veeresh Malik takes the Tata Nano out for a drive. Check out what he has to say about this much-touted small car now
44 Medium Term Chettinad Cement rose 3%, Repro India rose 3%, while BHEL fell 6%
time 61 Fourth in Pune
HEALTH
Compassion 52 IsUnscientific? Science revolves around quick discoveries, patents and money. What is the role of compassion in this? – Pulse Beat: Medical developments from around the world
BEYOND MONEY
66 Vision beyond Life Dr Nita Mukherjee finds a unique community eye bank in Jaipur
DEPARTMENTS Letters............................. 4 Book Review.....................60 Money Facts.....................63