The Hindu Business Line : Misinformation may come disguised as straight tips

All the statute books in the world and all the rules of all the stock exchanges on earth cannot eliminate ignorance, greed, fear and hope from the human animal, declares Edwin Lefèvre in Reminiscences of a Stock Operator ( www.wiley.com ).

Another source of loss, according to him, is deliberate misinformation that comes disguised as straight tips. Wholesale dealers in securities, manipulators, pools and individuals resort to various devices to aid them in disposing of their surplus holdings at the best possible prices, the author cautions.

“The circulation of bullish items by the newspapers and the tickers is the most pernicious of all.” Lefèvre doubts the statements of semi-official nature in news reports. Examples are phrases that attribute a view to ‘leading insider,’ ‘a prominent director,’ ‘a high official,’ or someone ‘in authority.’

Many of the so-called statements attributed to insiders or officials have no basis in fact, he observes. “These stories are invented by somebody or other who has a large interest in the market.”

Lefèvre reminds investors, therefore, of Wall Street gyan – that acting on ‘inside’ tips will break a man “more quickly than famine, pestilence, crop failures, political readjustments or what might be called normal accidents.”

A classic read of current relevance.

Guide to investing in India

The trend towards globalisation has increased the intensity of mergers, in a bid to create more focused, competitive, viable large players in each industry, says Astute Consulting in Doing Business in India ( www.astuteconsulting.com ). “The basic regulations covering mergers are governed by the Companies Act, 1956, while the procedural aspects are covered by the Company Court Rules, 1959.”

In India, most mergers involve the transfer of undertaking of an existing company or several existing companies to another existing company of which all the members of the transferor company or companies become or have the right to become the members and the subsequent dissolution of the transferor company or companies, the publication informs.

“The merger is effected only after obtaining confirmation from the shareholders, creditors, and the High Courts of the respective states of the companies…”

Useful reference material, for starters.

First the returns, then the risks

In banking, the returns come first, the risks come later, says Narayanan Vaghul in one of the essays included by K.K. Ammannaya in Bankers on Banking: Collection of Speeches of Recipients of K.K. Pai National Banking Award published by Dr T.M.A. Pai Foundation, Manipal.

Since whatever business you do crystallises into a loss not today, but later, every bank chairman does what can fetch him credit for today, Vaghul adds. “By the time the risks come, he will not be the chairman.”

Unlike the public sector banks, where tenures can be as brief as one, two or three years, private sector banks have been enjoying sustained leadership, he differentiates. “A person who has to be there for 17 years cannot do this game. Because I have to live to see the mistakes I make, for the mistakes which I made in 1985, I have to be accountable,” recounts Vaghul.

Of interest.

Make numbers memorable

There are those unsympathetic quotes about statistics, you know. Yet, if you want to use statistics in your presentations, you can score by making them understandable and memorable, says a Pocket Mentor publication from Harvard Business Press: Persuading People ( www.tatamcgrawhill.com ).

“For instance, to convey $1 trillion, say, ‘If you were to count a trillion one-dollar bills – one every second, 24 hours a day – it would take you thirty-two years’.”

Another tip is to personalise the numbers, thus: “Four out of ten people in this room exaggerate their expenses.” Cite jaw-dropping comparisons, the book advises: “Our main competitor processes orders fifty times faster than we do.”

Persuasion is a blend of art and science, explains Harry Mills, the ‘mentor.’ To achieve the blend, you need to master a range of skills, including building your credibility, winning others’ minds and hearts, and overcoming resistance to your ideas, he describes. “If you sharpen these skills, you’ll sweeten the odds of transforming your own excellent ideas into valuable business outcomes.”

Ready takeaways.

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