Financial intelligence boils down to four distinct skill sets, say Karen Berman and Joe Knight in ‘Financial Intelligence for IT Professionals’ ( The first of these is the understanding of the foundation, the basics of financial measurement. This demands an ability to read income statements, balance sheets, and cash flow statements; and knowledge that profit and cash are different.

Next comes, understanding the art. “Financially intelligent IT (information technology) managers can identify where the artful aspects of finance have been applied to the numbers, and they know how different rules, estimates, and assumptions might lead to different conclusions.”

Third is the understanding of the analysis, such as ratios, ROI (return on investment) study, and so on, and using the analysis to make better decisions. And lastly, the big picture, or the context. “Factors such as the economy, the competitive environment, regulations, changing customer needs and expectations, and new technologies all affect how numbers are interpreted and what decisions should be made.”

If, as an IT professional, you wonder whether you need financial intelligence, the authors present a list of advantages that accrue from financial literacy. Foremost in the list is the ability to move IT from a service to a strategic position in the organisation. “Financially literate proposals will get senior managers’ attention. They’ll show that you understand where the organisation’s priorities lie.”

Starter material of good value.

Market wisdom

What you are buying is important but it is more important at what value you are buying. This is a piece of RJ (Rakesh Jhunjhunwala) gyan that Brij Raj Singh quotes in ‘India Chalo’ (

“I asked him how long he thought this madness was going to last? He replied that volatility would remain but that the market was going to reach 50,000 in the near future,” the author narrates. “What did he think were the risks and how long before the markets would correct? He took me by surprise when he said, ‘Boss, dekho yeh market hai aur tum ko bhi pata hai market may sab kuch ho sakta hai.’” Meaning, ‘Boss, this is the market, and even you know, anything can happen in the market.’

India is a fascinating place as an investment opportunity because of its very solid capital market, the author avers. “Typically, if one was to look at investing in the stock market, some would say that this could be another bubble. I personally don’t think that this is a pipedream.” However, he concedes that valuations may be high. “And I am sure the markets will have their ups and downs because that’s what markets do.”

Optimistically, Singh cites some convincing statistics. “There is a huge change from a mere 0.1 per cent of households holding equities in 2004 to around 5 per cent in 2006… The household savings rate is on the rise and the proportion of investments held in equities is expected to increase to 15 per cent by 2011.”

Advised addition for the keen perspectives that the book offers.

Builders, brokers and barbers

Investing money on a regular basis is one of the best ways to become wealthy over a period of time, says Yogesh Chabria in ‘Invest the Happionaire Way’ ( “I started investing in the capital markets when I was sixteen. Investing is all about using your common sense and acquiring assets that will go up in value.”

Talking about real estate as an investment avenue, the author counsels that the best thumb rule is a comparison of the rent with the EMI (equated monthly instalment). “Today, monthly rents are much cheaper than buying a place on loan. Most end users would thus prefer investing elsewhere and living on rent.”

Do not get carried away by what builders or real estate brokers tell you, he instructs. “Most of the prices are artificially inflated.”

A mistake several people make is that they ask builders and real estate brokers if it is the right time to invest in property, bemoans Chabria. “Imagine asking a barber if you need a haircut… For that matter, don’t even ask your stockbroker if it is the right time to buy or sell. Trust yourself.”

Valuable lessons.

(This article was published in the Business Line print edition dated June 22, 2008)
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