16th JAN 2008

Volume 1, Issue 10

Wealth Incorporation - A CCIM Finance Club Initiative Presents

CHAANAKYA
..Tracking the Economy
Issue Attractions

National Headlines International Headline Corporate Interview Quiz Student Editorial Pearls of Wisdom/Tag lines/Buzz Word

1 1 2 2 3 4

Injustice, poverty, slavery, ignorance - these may be cured by reform or revolution. But men do not live only by fighting evils. They live by positive goals, individual and collective, a vast variety of them, seldom predictable, at times incompatible. - Isaiah Berlin

National Headlines
4 global firms in race for Navi Mumbai airport Maharashtra plans 9,000 kiosks for e-gov Power IPOs set to cross Rs 30,000 cr this year Auto Expo spotlight on Tata small car Gitanjali eyes retail buyouts in the US FDI doubles contribution to total investments in India Suzlon bags order from Spain Onion exports likely to dip this fiscal No formal word from Goa yet on SEZs: Nath Licence to open bank branches may go REL, GMR in race for Singapore power firm S&P puts Tata Motors ratings under credit watch

Inflation 3.5 % , IIP 5.3%

15 days Movements

International Headlines
Rolls-Royce said that it was to axe up to 2,300 jobs in the UK, Europe and US as it seeks to trim costs The Federal Reserve will lower interest rates aggressively in the coming months to try to avert a US recession Blackstone, the world's largest private equity house and an increasingly powerful player in the hedge fund industry, is paying $930m for a fund manager specializing in the credit markets. Countrywide Financial, the largest mortgage lender in the US, is in advanced talks to sell itself to Bank of America, a move that would end almost 40 years of independence As the $100 mark is breached and seems set to go higher, fears are voiced that the global economy can no longer take expensive oil in its stride Apple has reignited its war of words with the music industry after agreeing to slash the cost of downloading music via its iTunes platform by 10 per cent Nasdaq, the US market that failed in an attempt to buy the London Stock Exchange last year, is set to finally crack Europe with the acquisition of the Nordic group OMX as early as next month

The most important single central fact about a free market is that no exchange takes place unless both parties benefit . Milton Friedman

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Interview With Christopher Browne

Christopher Browne traces his investing approach directly back to Warren Buffett's guru, Ben Graham. Guess what? It still works Graham's buy-cheap discipline kept value funds, including Tweedy Browne's, out of tech stocks during the dotcom bubble; and while value funds have lagged lately, they still have the best five-year return of the major investing styles. In a recent chat with managing editor Eric Schurenberg, Browne explained why. Q In your book, you say value investing has produced better results than any other strategy. That's a strong statement. A Don't take my word for it. There are plenty of academic studies confirming that if you buy stocks that are undervalued by simple metrics like low price/earnings and price/book ratios and you are patient, you'll beat other strategies in the long run. Q Is that all you need, low P/E and P/B? A The essence of Graham's methodology is to buy businesses below their intrinsic value, giving yourself a big margin of safety. We're like bankers looking at loan collateral. We ask, What's the business worth? What have similar companies sold for? Does that price make sense? And can we buy the stock for a lot less? Q Problem is, cheap stocks can stay cheap. A A stock may take a week to rise to its true value, or five years, or it may never. But more often than not it does. A few years back we bought into Central Newspapers, which was controlled by a Pulliam family trust, Dan Quayle's family. A trust provision prevented the company from being sold unless the trust got voting control of the acquiring entity. People said, "It's dead money. The family can't sell." But we said, "It's cheap. What's our downside?" Turns out, there was a little clause that let the family ignore that control provision if the papers' existence was threatened. We didn't even know it was there. But in less than a year, some of the family wanted out and claimed the Internet threatened the papers' existence. They sold to Gannett for a handsome price. Q Nobel laureate William Sharpe says that for a strategy to beat the market in the long run, it'd have to exploit a consistent flaw in how investors price stocks. Does value do that? A Most people want to own sexy, fast-growing stocks. But as Buffett says, you pay a dear price for a cheery consensus. As a value investor, you hold your nose sometimes and buy a boring stock because it's cheap. Then you have to be patient. That's hard for a lot of people in my business. It's like they're afraid some client or boss will say, "Hey, you haven't made a trade in five months! What are we paying you for?" They're type A personalities. Value investors are type B-not excitable, non-egotistical. Q Would a type B challenge Lord Black? A Value investing had a lot to do with it. When we dug into Hollinger's finances, we were outraged. We decided to pursue it. Q Are you type B enough to own financial stocks today? A Yes, but ours have very limited subprime exposure: PNC Financial, U.S. Bancorp and Lloyds. The first yields nearly 4%, the second over 5%. Lloyds is takeover-able. Once people realize there's not a warehouse full of subprime out back, the stocks will rebound.

Quiz

(Answers in the same issue)

1. Vijay Mallya has recently acquired a 50% stake in the US based Very light jet manufacturer (VLJ) ________ 2. The ______sector has the highest number of crore-pati executives at 50 followed by 44 in the IT and 41 in the construction sector 3. Royal Dutch shell, Europes largest oil company has bought a 55 percent stake in ____________ in a 30 yr production sharing contract to develop coal- bed methane in China. 4. _________ has filed an application with Delhi stock exchange (DSE) seeking voluntary delisting of equity shares of the C/O from DSE 5. For a Foreign C/O to get into a JV with an Indian C/O, the maximum permitted Foreign stake under rule is _______
One day our grandchildren will go to museums to see what poverty was like. . Muhammad Yunus

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The Great Recession of 2008 will it or will it not happen? By: Savitha Chacko
America is a large, friendly dog in a very small room. Every time it wags its tail, it knocks over a chair. -- Arnold Toynbee
This time many predict that the wagging might just turn around the rising fortunes of the Asian markets that will catch a cold as USA gears to sneeze like it did in the early 2000s. Many analysts gathered at the American Economic Association's two-day annual meeting recently spoke of a recession as almost a given but differed over how severe it will be. Stephen Roach, Chairman-Asia of Morgan Stanley said that the US consumption share of GDP is on its way down. He says that the US consumer is facing the toughest times in 30 years, and the impact on the economy could be acute. The US consumer had turned his home into an ATM machine. But now, with the US property bubble deflating, the wealth effect, based on rising home values, is over, is done, is finished. He says that the complacency of Asian countries based on the assumption that Asia has decoupled from the USA is disturbing especially when the US absorbs 21 per cent of Chinas exports, 22.5 per cent of Japans and about 14 per cent of Aseans. If the US consumer goes down, Asia will feel it. The optimists however are seeing the glass half full. A recession -- negative economic growth for two consecutive quarters -- probably will be averted next year, as per these optimists, noting that the economy has already taken some of its hardest hits. Nationwide, unemployment would have to climb to 6% from the current 4.6% to cause a recession, the forecast said. Such an increase would require the loss of 2 million more jobs. Cuts on that scale won't be possible, because job growth was already weak throughout the current economic expansion. Though the economic outlook was largely cloudy, it did include some silver linings: The loss of 3 million manufacturing jobs early this decade means there is little room to cut more positions. Most of the damage to the economy from the housing slump will be over by the end of next year. The weak dollar will help U.S. exports Consumer spending will drop, but much of the effect will be shouldered by other countries as U.S. imports of their products decline.

Did you Know?

Touch-tone telephone keypads were originally planned to have buttons for Police and Fire Departments, but they were replaced with * and # when the project was cancelled in favor of developing the 911 system.

Did you Know?

Coca-Cola was the favored dr ink of Pharaoh Ramses. An inscription found in his tomb, when translated, was found to be almost identical to the recipe used today.

Answers To Quiz 1. Epic Aircraft 2. Pharma 3. Verona Development Corp. 4. Pantaloon Retail India 5. 26%

Stock Ratnas
EXIDE INDUSTRIES BSE500086 NSEEXIDEIND CMPRS.75, TARGET PRICERS.92 BSEL INFRASTRUCTURE, BSE532123, NSEBSELINFRA CMPRS. 85, TARGETRS. 133 EVEREST KANTO CYLINDER BSE532684, NSEEKC CMPRS. 349, TARGETRS. 390 GULF OIL, BSE506480, NSEGULFOILCORP CMPRS. 291, TARGETRS. 354

Conclusion The old saying goes that economic forecasters were invented to make meteorologists look accurate. When the weather reporter predicts rain, one can look outside to see if the forecast is correct. But when an economist predicts a recession, the only verification is the opinion of other economists. Its difficult to predict a recession and most of such predictions have proven to be wrong thanks to the mystery behind business cycles. On balance, it is not likely that the United States will experience a recession in 2008. Most economic forecasters expect growth to continue in the 2.5 percent range. Employment and personal income have remained strong through October and November of 2007, so consumption spending should continue, buoying the economy. The weak U.S. dollar makes American exports more competitive, thereby fuelling economic growth and employment.

The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake . Alan Greenspan

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Tag Lines:
The right relationship is everything - jp morgan chase bank its time for clarity - kpmg passion for road - mazda software powers the internet - oracle what can brown do for u? - ups make it happen. where people matter - the royal ban k of Scotland

a. SIDBI c. Bank Of Baroda

b. Bank Islam d. AMD

The right relationship is everything. The right relationship is everything.

How to Prepare:

Pearls Of Wisdom From Seniors

Seema DSouza (Batch 05-07) - seemadsz@gmail.com Associate- Occupier Services DTZ, International Property Advisors Job Profile : Client Management: Assisting in real estate

Have a strong interest in the real estate sector

and keep track of current happenings in that sector.

Have a strong base in Financial Management

transactions, Creating requirement specific presentations Business Development: Creating pitch books, making

(basic finance knowledge)

There is a Group Discussion which is followed

presentations to prospective clients for obtaining mandates on the sectorial basis. Relationship building: Major landlords / developers in Mumbai

by case analysis and then personal interview.

Inclusive of all the above one must have strong

confidence and good communication skills

Buzz Word
Dead hand provision provision that only the original directors of the company can withdraw the poison pill to defend the take over or merger. Diworsificationthe process of adding to ones portfolio in such a way that the risk/return trade off is worsened. Evergreen fundinga british term that describes a revolving credit arrangement in which the borrower periodically renews the debt financing rather than having the debt reach maturity. Gridlocka government, business or institutions inability to function at a normal level due either to complex or conflicting procedures within the administrative framework or to impending change in the business.

Book Quotes:
whenever youre in conflict with someone, there is one factor which can make the difference between damaging your relationship and deepening it. That factor is attitude William James If you only do what you know you can do, you never do very much Tom Krause Be yourself. Above all, let who you are, what you are, what you believe, shine through every sentence you write, every piece you finish. John Jakes

Please mail your valuable feedbacks, reviews at chaanakya.ccim@gmail.com

Contributions made by : (1st Year Students)

Quotes/Headlines/Taglines Logo Fouzia Taranum Gnana Devi

(2nd Year Students)

News Graph Article Quiz Proof Reading Pearls Of Wisdom Interview Stock Ratna/BuzzWord/ Book Quotes Editing Bhavana Kataruka Anshu Awasthi Savitha Chacko Usha B Sindhu B Navali Gopal Pai M Soumya Ranjan Ritesh Verma Mathew A Thomas