The Hindu Business Line : Financial illiteracy among investors?

Story so far: Moved by the plight of patients, I put to use whatever first-aid skills I'd learnt in school, and attended to the needy in a temporary shelter put up by striking medicos. Outside the pandal, though, policemen are wielding the lathi on unarmed students protesting the new reservation proposal. How heartless, I wonder!

Episode 130

It was on a vexing note that I'd wrapped up last week's episode: "Is the ongoing reservation turmoil the latest tragedy we are witness to?" To this, Priya responds from Phoenix: "Dear Swati, being in the US for sometime now, I cannot help but compare the education systems, especially since my kid is studying here. The agenda here is `No Child Left Behind' in literacy/education, and the ongoing programmes associated with the same. There is absolutely `No' denial of education whoever they are. Naturally the economy prospers." How I wish we had enough resources to have a similar system closer home!

"Instead of raising such issues and wasting precious time, money etc why can't they have a vision like, `Achieving Complete Rural Literacy', or providing world-class education in government schools. It's definitely possible," urges Priya. "They can innovate jobs for people below poverty line, abolish child labour and make education compulsory at least till X standard. I mean, there are better ways to improve our country rather than through reservation. It only promotes lethargy. Regarding the issue of policemen beating the students, the less said the better. Only reminds me of Rang De Basanti."

Thanks Priya. Perhaps, here, we have the policy of `No neta left behind!'

"Dear Swati, instead of posting my comments on your blog, I have written and posted a detailed article on the subject on my blog. I am sure you will find this too informative," mails in S. Gnana Haran (www.gnanaharan.blogspot.com). "Removal of entry barriers does not ensure successful performance. If entry itself is considered as an indicator of success, then obviously something important is being sacrificed." I liked that comment on your blog, Gnana.

Legal process outsourcing

Another blogger, Rahul Jindal, writes: "Hi Swati, I read your column with interest whenever the corporate grind allows me to. I noticed that many of your readers are interested in knowing more about LPO companies, and some are even interested in setting up their own LPO shops." Rahul offers LPO consultancy, and has experience in the industry, I learn.

Rahul adds: "I also run a blog dedicated to LPO at http://legallyours.blogspot.com. Should you need any information from me, I am just an e-mail away."

I liked your site, Rahul, with three time displays, so that one can work not just 24x7 but 72x7! I should read that latest post of yours on the roundtable discussion: `Inside vs Outside: When Does it Make Sense for Law Firms to Outsource?' That, apart from straying into the other blogs of yours, like Sukhan on poetry, and The ZombieWorld Sinusoid!

Let professional band

"Hi Swati, I read your article on thehindubusinessline.com and I also visited your blog. I am quite impressed by your clear grasp of things and lucid manner of presentation," writes Rajeev Goswami, Director LLB, ACS, ACIS(UK), PGDBA, MICA, Dip. IPR, Intellextra Outsourcing Solutions P Ltd.

Thanks Rajeev, though I'm yet to decipher all those qualifications behind your name! "I am also single-handedly running an LPO since last two years at a very small scale. I have a tie-up with a UK based law firm and while that provides me a regular streamlined income, I have also received singular assignments from US, Australia and Turkey." Great.

"I am really positive that the Indian LPO industry is poised for big growth that would happen soon. But we should not forget the limiting factors too. Yes, we do have large English speaking population, but when it comes to delivery, there are gaps. VC (venture capital) funding is another area. Most VCs are not trustworthy today. They will either ditch you before time and launch their own LPO/KPO or will fail to understand the ground business realities." Shocking!

"It is better that professionals pool together and launch these LPOs or KPOs on their own with a long-term vision. We do have very rosy figures for LPO work coming into India but this also creates problems at times. Every lawyer and his brother today want to open an LPO without looking at it from business perspective and often fail to deliver." Brothers in law? "These guys may harm the business even if marginally," cautions Rajeev. "On a large scale things seem to be good though. Another thing, after LPO you will soon hear a lot about accounting or financial PO. This is going to be the next big thing. Even bigger than LPO. Best regards."

I'm sure, Rajeev, the president of the Institute of Chartered Accountants of India will be happy to hear about your bright forecast for accounting services.

Investor education

During last week, on almost every other day, I was getting late to work because of parking lot conversations in my apartment block. One or the other of my co-residents would stop me and ask, "Swati, will the market move up or down, today?" or "Shall I invest in this stock?" or "Tell me which IPO I should apply for."

You'd appreciate that these are not issues that can be answered in a jiffy, though that's exactly what I have all along been doing, being hard-pressed for time to commute to office. So, on Friday morning, I suggested to the apartment association's secretary that we could all devote an hour to serious investment learning that evening. He was happy when I volunteered to be the faculty.

To my great surprise, when I returned from office that evening, I found that a few cars had been pulled out of the parking area to accommodate chairs for the class. Many residents, including housewives with babes in arms, were ready for stock gyan, equipped with notebooks. Somebody had rustled up a roll-up board. "Swati, we are waiting for you to start," called out my neighbour, and he had a cup of coffee ready at hand.

Without losing time, therefore, I wrote `Basics of Investment' on the board. From my bag, I extracted the day's newspaper and unfurled the stocks pages. "How many of you understand these pages?" Suddenly, everybody was ominously silent. My next question was, "How many of you invest in shares?" Manyhands went up cheerfully.

"What is your investment strategy? How do you make your investment decisions?" I asked and looked around. Kiran replied first: "I ask the broker." Pavitra aunty announced, "My friend tells me what to buy and sell." And Ramu uncle said, in a hush, "Don't tell anybody. The trick I follow is to toss a coin!"

I was thoroughly disheartened. What a dismal status of financial literacy we have amidst us, I wondered. Send in your thoughts by Friday.

Swati_CA@hotmail.com

http://Swati-CA.blogspot.com

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