It was a nice framework around which “The economics of Bangalore”, Mint, 14 November, was woven. However, I believe the success has more to do with “division of labour or doing what you do best” theory of economics than transaction costs, though the latter has a role, too. I’ll explain why I believe that it’s not “straight out of Coase”. About 95% of all IT services contracts are for more than two years’ duration. It’s not the same as “finding labour every day”. It is like getting someone who can do the work at a lower cost over a long run. Also, long before Infosys/Tata Consultancy Services/Wipro came into limelight, the big guns of outsourcing, EDS and IBM, had been doing it “on-shore”. Technology just made it economically viable for it to be performed out of India.
I read Manas Chakravarty’s column “Why timing the market doesn’t work”, Mint, 8 December. It gave me gooseflesh. I am a regular trader/investor in the stock market and a successful technical analyst.
Yet, something always kept me confused. In spite of having a success rate of more than 85% in predicting the stock price movement, why is it that I did not make much money from the markets?
I was constantly disturbed from within and felt that something was wrong. But I could not understand why. I told my wife that I felt I was constantly chasing the market from one end to the other.
It struck me that if this continued I would not gain anything from the market. That is, except for more experience in calling the shots and predicting the price movements (I am talking about short- and medium-term trends, I don’t believe in intra-day price movements).
Chakravarty’s article made me aware about the statistics that the highest positive returns or the biggest negative returns are generated on a negligible proportion of days.
I guess, in spite of knowing the technicals and how the prices move, I have missed being in those negligible proportion of days when the price actually jumped. I concentrated and tried picking every move of the market.
I hope I am clear enough to make you understand what I want to say. At the same time I do not fully agree that the market should not be timed as in medium- and long-term trends. The market tells you “buy me, I am going up”, at that time I guess we should be buying and letting the market take its way to the top.
Reading the article in Mint reassured my thoughts and I am sure it will help me follow my instincts more often than not.
The article “When it comes to investing, advertising plays a limited role”, Mint, 7 December, highlighted a complex subject, the role of advertising in the banking and financial services industry.
On the one hand, the key triggers for a consumer are words such as trust and loyalty and not awareness. On the other hand, the key question that marketing strategists and their advertising agencies need to answer is: What is the way to build trust and loyalty in their consumer’s mind?
Is there a quicker process of generating trust through every consumer touch-point every day and keep talking about it through advertising and other activities? As a consumer of these products and services and also as a recent marketer, I feel the latter is a viable option.
The process of brand building is more than a reach and distribution game. Sooner or later, many private players will create distribution muscle that will be at par with the public sector players, at least in the important geographical segments.
That will be the time when the process of brand building and hence advertising will come into play.