• ETFs and Skewed Indexes

    The concept of an Exchange Traded Fund (ETF) is that you buy a mutual fund like a stock on an exchange. This is suitable for investors who want to invest in a basket of instruments or an otherwise difficult-to-invest market.

    For example, investors in India may want to invest directly in US stocks. But the legal procedures for direct investment are painful — instead, they could buy an ETF that, in turn, is based on a US stock index.

    When you buy a unit of, say, NiftyBeES (an ETF by Benchmark Mutual Fund), you get a share worth 1/10th of the Nifty price; so for Rs. 580 you could buy a piece of an index that, without the ETF, could take you more than 40 lakhs to fully construct.

    While most index funds lock you in for a year or so (with a 1% exit load) ETFs can be sold any time without such a penalty. But it could just be that you can't sell very easily if the ETF is not well traded — getting a price lower than the fund's NAV is, in a way, an exit load.

    There are now more than 2000 ETFs in

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  • Our dissent, their dissent

    How would China's government have responded to an Anna Hazare type challenge? To answer that question, one needs to assess the phenomenon and mechanism of the Hazare-led protests this past week. In some respects, these are more important than the immediate issue of a strong ombudsman law or Lok Pal Bill.

    When Hazare and a small group of supporters went on fast at New Delhi's Jantar Mantar grounds, the symbolism was just too tempting: a frail, diminutive man taking on the might of the state; a government riddled with financial scandals; a ruling party with a succession of incompetent, 'I don't give a toss' spokespersons.

    Television channels took the story to living rooms across the country. Public impatience, growing with every swindle in the past few months, reached boiling point. Soon enough, Hazare was a folk hero. He found backing from movie stars and business leaders alike, and from tens of thousands of ordinary middle class people. There were copycat demonstrations in city after

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  • Chocolate and Petrol

    The Cocoa Exchange on Wall Street, a highrise built in the early twentieth century, is now dwarfed by characterless towers containing offices of the world's biggest trading institutions. The building's name is as surprising as its quaint, ornate appearance. Who would have thought cocoa once merited a skyscraper of its own in the world's financial capital? Despite the millions of chocolate addicts across the world (I can be counted among them), cocoa does not figure in our imagination today as a crucial driver of the world's economy. When the French military participates in a UN backed operation in Ivory Coast, we do not cynically dismiss it by saying, "It's a conspiracy to control the world's chocolate, led by France whose culinary industry depends heavily on the commodity." Few politicians will lose votes because Easter eggs are dearer this year than they were in 2010.

    Cocoa was first grown and consumed in Mexico, but it was Europeans who discovered it combined well with sugar, and

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  • Careers Are Overrated

    Now that Barack Obama has fixed the American economy, Anna Hazare has defeated Indian corruption, and the BCCI has created a sensible league format for the IPL, we can turn our attention to the remaining, smaller problems, that we can solve on our own without having to rely on these superhuman people. I suggest we start with the problem that plagues so many of us: our jobs.

    This is something that most people don't realise when they start - but their careers are going to be a source of frustration for them. There are the day-to-day issues, like dealing with HR, the commute to your job, and the food in the canteen. But there are also larger, more philosophical problems. About six months into your career, you start thinking "Am I really cut out for this? Should I be doing something else? Is this meaningful?"

    And then you realise that you have EMIs to pay and resign yourself to your job.

    Did I say that? What I meant to say was: and then you gain self-confidence, start kicking ass at your

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  • When I was doing the research for my book on Jaane bhi do Yaaro two years ago, writer-director Ranjit Kapoor (the film's dialogue writer) told me about an incident that changed his life. It was 1969 and Kapoor was a young man in dire straits, nudging towards a life of crime — "main galat raaste pe jaane wala tha" — when he chanced to see Hrishikesh Mukherjee's Satyakam. The film, about a stubbornly honest man struggling with hard realities, wasn't exactly fast-paced entertainment, but Kapoor was riveted.

    "My friend sitting next to me fell asleep out of boredom, but I was weeping silently in the hall," he recalled. "After that film, the world began to seem like a very different place — I had hit rock-bottom, but I picked myself up." Forty years later, the experience was still so fresh in his mind that he dedicated his own movie Chintuji to Mukherjee, Dharmendra and Narayan Sanyal (who wrote the novel on which Satyakam was based).

    Watching Satyakam recently, I realised that its central

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  • As I write this piece, the highest gains amongst the 50 shares that make up India's Nifty, have been logged by Sesa Goa, an iron ore producer. The good cheer comes from the Supreme Court ruling yesterday that the Karnataka government's ban on iron ore exports should be lifted.

    At the same time, the biggest loser on the Nifty is Cairn India, whose investors are worried whether the proposed sale of a stake to Vedanta will be cleared by the government.

    So much for free markets.

    Strip a few layers off the onion, and it gets messier: the Karnataka government imposed a ban on the export of iron ore because it had discovered that a great deal of mining in the state was illegal. Rather than do the hard work of figuring out which mines were legit and which not, it used the hammer of the state and shut down all exports. Never mind that an estimated 100,000 jobs were put into question. The underlying conflict was much more critical than jobs or investments; critical to the politics of the

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