The Hindu Business Line : When you gotta go, you gotta go

(Which makes you wonder really. Blaming somebody or something out there in the most nebulous way possible is okay, even widely acceptable, for losing crores on the stock market. But try it for an overdue news column and suddenly you look like a lazy bum. Maybe I should have said it in a suit.)

But in a way it was a good thing. For one I was able to read an interesting article by a well-known TV anchor in Saturday morning’s papers. And two, as I worked on gathering together notes for this week’s column, I was reminded of an interesting telephone conversation I had last weekend with a friend in London. This also brought up a once forgotten anecdote.

So, all in all, the delay was a good thing.

‘Rally’ is the word

First things first. The TV anchor throws his arms up in the air trying to explain why there is action in Essar stocks. Especially in Essar Steel that reports say is about to be delisted. Yet what are these stocks doing? ‘Rally’, I believe, is the word that describes this and many other such unexplained phenomena.

He is very nice and proper about his comments, of course. But let me try to extend his line of thinking, throw in a little street logic and see what we have. (I don’t have to be nice like him. Unlike him, no one buys stocks because I tell them to. With sound reasoning that may be found in any one of my grade sheets from business school.)

Check it out

A family of stocks at insane premiums? Check. A promoter with a chequered history of execution? Check. Some stocks of zero long term prospects? Check. Sane investors would do anything with the stocks but ‘rally’? Check. Name another banking cash transaction instrument like a DD? Cheque.

So what’s up with Essar?

I don’t think it is anything in particular. Perhaps we have a situation here where many people don’t even care what stocks they are buying into anymore. All they need is something to buy and sell. Something to make that quick profit on. Or, of course, burn money on. And then blame global trends.

In other news more people are losing their jobs because of the sub-prime crisis. While there was some good news from Goldman earlier this week I think there was the usual “We might have to write off a leetle teeny weeny bit ok?” news from both Barclays and HSBC.

Bidding farewell

We talked about Stan O’Neal getting booted off two weeks ago. And in the interim Chuck Prince from Citi got a tearful farewell too. Some would say with a name like that he was asking for it.

Board member: “Who is our CEO?”

Other Board member: “Chuck Prince!”

Rest of the board: “Yes we must do that right away!”

But it is happening to many heads that are too small to see rolling from here.

I occasionally speak to a close friend in London who works for one of the bigger banks in a trading desk. Thankfully the guy is a rather contrarian in his investment strategy and actually came out of the CDO crisis with his books not just intact but rather healthy.

Last week he was on the phone speaking to me in Hindi. This makes sure that no one else on the desk gets to know what he is telling me. “The girl in front of me Sid… she is gone. Fired her today. The guy next to her is not at his desk… because he got fired last week. I am doing ok though. But carnage at some desks.”

So I guess for every big honcho that gets the sack, several tiny little trading floor dwarves get annihilated as well.

Which leaves us with just enough space for a cute anecdote.

Big banker in India, doing terribly in the markets, sends his housing lease to the landlord for renewal. Hears nothing of it for weeks. Calls back several times. Finally runs into him one day and asks him what happened. Landlord says that he was told by the people in HR (flat was on company lease) that it wasn’t being renewed.

Banker, taken aback, asks his landlord “Why not?” “Sir, I think they are going to fire you and haven’t told you yet. So no more company flat for you.”

And so it transpired. Hot shot banker got his pink slip from the landlord.

If you are in any way remotely related to the CDO/subprime thingie, it might be good to have a word with that landlord now. You know… just in case.

(The author, an alumnus of IIM-A, was a management consultant before quitting to work as a freelance writer, author and general handyman. He blogs at www.whatay.com)

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