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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Some Reading

Posted by Muthu on August 17, 2012

Some time ago, I was invited for a program with topic ‘Science of Sales’. The trainer is a NLP practitioner who had horrible ideas. For example, to win over clients, one has breath exactly in the rhythm of client, opening and closing of eyes needs to be in Sync with client and so on. If I mimic your breath, eye and limb movements, you may conclude I’m mocking at you and never ever see me again:-) 

A sale is not about cold calling, hyper activity, NLP or pestering. Most of the sales books are so bad that I think one would do worse after reading the same. I would suggest the book ‘Influence- The psychology of persuasion’ by Robert B.Cialdin. This is one of the best books you can read about selling. 

I also have a request. If any one of you have the book ‘God is my broker’, please lend the same to me. I’ve been trying to get this book with out any success. I’ve even requested Flipkart to procure this book. It is only available at Amazon at an expensive price. 

What is so unique about this book? It is a wonderful satire of all self help and self development books. People who like Deepak Chopra, Anthony Robbins, Stephen Covey and other self help wizards may avoid this book. It pokes at every one.

For last few years, I’m running away from self help books. When ever I go to book store, I look at self development section to amuse myself by looking at ‘How to……..?’ books. At times a few good books are incorrectly displayed under self-help too. 

Wealthy people seldom write ‘How to get wealthy?’ books. People who write them make money only through the same probably after having failed at all other options. 

John Grey of ‘Men are from Mars and Women are from Venus’ fame (and many others titles that followed the same) availed a charted trip from Deccan to visit a Godman to pray that his book to be reviewed and interviewed in ‘Oprah Winfrey show’. Once it appeared he again made a visit to Godman to convey his gratitude. So much so for self help and psychology. Captain Gopinath has mentioned this episode in his book ‘Simply Fly’. 

I keep getting repeated queries on what books read to on investments? Though there are many good ones, all one needs is to read the Warren Buffett’s annual letters available freely in the web. If one understands this, reading or not reading other books does not matter. Even though I’ve suggested this to many and asked them to get back to me after reading few letters, no one has ever reverted to me:-) 

I’ve repeatedly written about my belief in determinism (i.e.) that there is no free will. Recently I read a book ‘Free Will’ by Sam Harris who is an atheist but explains in scientific terms as to why there is no free will at all. I found the same interesting. 

Sam Harris became popular by his book ‘The end of faith’. This book is worth reading but may hurt hard core religious people. He says that when ever west says ‘war against terrorism’, they in fact mean ‘war against Islam’. The Christians and Muslims consider each other as enemies and one civilization – either Muslims or Christians may be completely destroyed by the other. In places like U.S., people born as Christians have no compulsion to follow religion unlike in 14th century Christianity when not following one’s religion is death.

He says that in the countries following Islamic laws, giving up the practice of one’s religion is death. All westerns religion which follows a book (he gives Islam, Christianity and Jewish as example) does not have growth because the religious authorities consider the content of the scripture as final. Though eastern religions have lot of flaws like their western counterparts, the main advantage is that one is allowed to disown, criticize the religion and more importantly it allows change and improvement.

He sees Pakistan holding nuclear weapons as the biggest problem for India. Any militant group can take control of the weapon and immediately eliminate some Indian cities resulting in India eliminating Pakistan itself.

During cold war though both U.S.A and U.S.S.R had nuclear weapons, they did not destroy the other because of self preservation. Any country which initiated the attack would have been attacked also. He says that this logic is not applicable for terrorists as they believe martyrdom would give them eternal happiness and reward them after life. So there is no problem in sacrificing one’s life for after life reward.

He opines Turkey is the best example of how a Muslim nation can evolve itself. Despite a Muslim majority country, its Government, justice etc. is based on secular foundation and not on religious laws.

He says Pacifism which became popular after Gandhi is not workable. Gandhi was successful because the opponent was British and not Hitler or some one else who would have killed all the pacifists. He said that Gandhi was so occupied by pacifism that he opined that Jews need to commit mass suicide so that Hitler would see the flaw in his approach. Sam says that the ability to get back can only be the deterrent against fundamentalists.

He also writes in detail about Inquisition and how hundreds of thousands of innocent women were brutally tortured and killed in public.

He says though essence of many religions are good, there is any one who seldom follows the essence and so there is no point in saying that all paths are acceptable. He has favourable  opinion about essence of Buddhism, Advaita and Vedanta. He says even the best western philosophy would dwarf before these.

He has written many other books as well.  Since I’m very less religious, I don’t get offended by these books. If religious comments would hurt some, then I would recommend only the book ‘Free Will’ written by him.

Read recently ‘Break out Nations’ by Ruchir Sharma. It’s a thought provoking book though not possible to agree with all his observations. He has written nicely how countries keep rising and falling. Hardly 300 years ago we contributed for 25% for world trade and it is now just 1.2%. I agree with his argument that no country can keep growing for ever, especially if the per capita income crosses $5000. As of now India’s per capita is $1400. A country need to keep reinventing itself if it has to grow well beyond reaching the per capita of $5000.

As I’ve written before, everything is cyclical. I’ve also written how commodity prices cannot keep growing in one direction. Commodities, including oil, gold and silver have been in the bull run for more than a decade. As mentioned earlier, on an average, bull run in commodities go for more than a decade and it is invariably followed by bear run for 2 decades. This is how it has been repeating for centuries and there is no ‘new normal’ (which is a most abused term) this time. Economies which are mainly dependant on export of commodities like Middle East, Brazil, Russia, Malaysia etc. may have a rough sailing this decade.

It would be good for commodity importers like India, South Korea etc.

Our infrastructure is not worth talking about. Also we have a very low base; GDP is less than $2 trillion for a population of 1.2 billion. The higher growth we are expecting in this and next decade is due to low base and investment in infrastructure.

Infrastructure cannot be imported. So building infrastructure would increase the GDP and its growth and would also benefit all the sectors in economy driving consumption further. High population, low base and lack of infrastructure; which are seen as negatives would only propel higher growth. It would take time for a country of this size to triple the per capita to $5000 and there lies the good opportunity for us, the investors. 

He says India has extreme advantages at present which should not be frittered away by lack of vision and governance.

As the base gets higher and higher, growth rate would become lesser or can be even be negative as we’re seeing now in many developed countries.

There has been lots of criticism going on reduced growth rate this year. No doubt that government can do a lot more but if you see rest of the emerging markets and developed countries, only China and us are doing better. In economies, relative growth rate and not absolute growth rate that matters. If every one gets zero and one student gets 20%, still he is the brilliant student:-) Every thing outer works only on a relative merit.

Those of us who think real estate would never fall can now look at China. There are ghost towns with no residents. When the prices keep rising, at some point there would not be buyers matching the sellers. Precisely at this point, prices can collapse. In some places in China prices have fallen as much as 70%.

Let us not talk about land. Even the prices of flats here are going so high that many highly salaried people are finding it difficult to buy them. Some trigger like real estate regulation would arrest this pace in the future. All the real estate people talk about how many people are without houses in India and hence price would go only in one direction. They forget the fact that demand alone is not sufficient, but purchasing power is equally important. I feel that some time in this decade, we Indians may see that real estate and gold are also cyclical and never goes in one direction forever. I’m waiting for that day:-)

4 Responses to “Some Reading”

  1. sachin kumar said

    Good one Muthu Boss

  2. bimal said

    brilliant and honest writing. Hats Off

  3. Ah ! the self help book’s… they have been a major let down for me too. Every time i picked one of those, i used to bore myself so much that i could never go beyond first few pages. Ultimately after trying few of those i gave up.

    Charlie Munger’s thought’s on reading have been a major influence on me for developing my reading habit’s and i try to read a book from this list at every opportunity http://mungerisms.tumblr.com/tagged/Munger-Pick

    I read few of the Buffet’s letters too, but yet to read all of them. I’ll to do so by this year end. Am sure you have read about his thought’s on the creation of housing unit’s Vs household unit’s in this year’s letter. I think that’s a very simple and powerful concept. Of course not justifying the real estate prices because of that.

    Regarding crowd madness and bull run’s i think reading “Extraordinary Popular Delusions and the Madness of Crowds” will give people a lot of perspective.

    While i agree about your perspective on growth for India, i think any country which presses the self-destruct button will not attract capital no matter how wonderful the growth in the recent past or prospect. We have to be very careful on our tendency to self-destruct. The world doesn’t owe us a better future, we have to work harder for it.


  4. Shinu said

    Turkey the best example…? – Human memory is getting shorter by the day and they forget or even hail the forces behind the black slavery, ottoman massacre, iraq invasion, sikh riots, gujarat riots, assam riots…. so fast if a suppressed calm and economic growth can be followed.

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