My Learnings

Friday, June 5, 2015

20 Simple Ways To Relax And Unwind When Life Has Been Rough

Do you occasionally feel like a cartoon character with a finger in an electrical socket? Stress is such an integral part of our lives nowadays that we seldom realise it isn’t something we’d classify as normal. Not all stress is abnormal, though. There is such a thing as good stress, which keeps us going and motivates us to complete tasks on time. But bad stress or chronic stress is what you should be wary of. This is the kind of stress that can cause physical, mental, and emotional discomfort, and make you feel all kinds of wrong.

The time to relax is when you don’t have time for it. Now is the time to manage the good, the bad, and the ugly faces of stress. Here are a few ways to help you do just that.

1. Identify your stressors

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We are often so lost in our self-acclaimed stressful lives, that we never really sit back and see what EXACTLY is stressing us out. Sure, everyone says that they have stress in their life…but has anyone ever listed down concrete things/situations that stress them out? Do exactly that. Sit down and ask yourself what exactly is making you so stressed; and you’ll often find the solution right here.

2. Craft

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Adopting a new hobby; something that gives you the chance to craft or create something is always pleasurable since it gives you the feeling of being productive. Also, repetitive motions - like the fine motor skills used to knit or make jewellery -- can soothe a stressful mind and help you calm down, since it makes you mindful of the present. Speaking of which….

3. Being Mindful

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It cannot be stressed enough, the importance of being mindful. We’re always plugged in on two hundred devices at once, and are under so much pressure to reply to every tweet, email and ping that comes our way. When was the last time you actually tasted the food you ate? Are you aware of how many sips it takes you to finish a glass of water? If not, it’s because you are too busy being staring at a screen. Most of our jobs today involve that, anyway, so it’s best to avoid the screen when performing normal everyday tasks and instead be mindful of what you’re doing.

4. Do Something Pleasurable

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Anhedonia is something we know all too well. It’s when the things you used to enjoy now leave you cold, as if there is a barrier between what you enjoy doing; few things seem rewarding any more. You can counteract this feeling by taking baby steps towards the things you used to enjoy. Some ideas include

(a) Be kind to your body: take a shower, lather on your favourite lotion and realise that you smell amazing, you feel clean. Drink lots of water, have lots of cold fruits and drink fresh juice.

(b) Other activities that seem mundane: meet up with a friend you haven’t contacted in a while, maybe go out with them to grab lunch; bake a cake and share it with your neighbours or colleagues.

Feel free to think up your own ideas; anything that makes you feel accomplished and pleased with yourself is a great way to begin..

5. Turn To Your Memories

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This one has personally worked for me very well. When you feel overwhelmed by all the criteria you feel the need to fulfil, or the constant need to be perfect at every task you ever attempt, and if you fail, which you inevitably will, you will feel the stress of being a grown up, and the stress that comes with taking all the responsibilities that you have WILLINGLY taken up. What you should do then, is turn to all the memories that are your safe haven. A memorable trip you took with friends, or the time that you faked a sickness to get out of going to school and actually succeeded (we never did), or even the time you got praise for something you successfully completed. The present will seem less intimidating, and you’ll realise that it’s okay to be stuck sometimes. With that acceptance comes peace of mind.

6. Create a Relaxation Room

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It doesn't have to be a "room" per se. It can be a space in your bedroom, or in a quaint coffee shop down the street, but the key is having an area solely devoted to relaxing. Where you can sit and actually take a breath without having a hundred and one things trying to get your attention. This should be your device-free zone, where all you can carry is probably a book or magazine or just your imagination. The idea is to give you a place to decompress with very little stimulus.

7. Buy A Plant

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This is the pet-equivalent for those who’re always on the go and working non-stop. Having a plant is seemingly a very unimportant thing to do, but they’re more than just indoor air purifiers. The colour green has a positive effect on the brain and simply having a plant around will make you feel much more connected with nature. Also, mindfully done, the act of watering a plant can be very relaxing and rewarding.

8. Be Grateful

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Wanting to be your best is normal, especially in teenagers. However, we seldom ever stop and feel satisfied with who or where we are. Of course, feeling way too satisfied would mean we would stop working to be better; but the constant pressure to be better than we already are is ruining a lot of us. We’re never happy with the job we have or the marks we got. But there’s absolute joy that comes out of waking up early in the morning and being happy that you managed it. Be happy for once, even for a little while, because it will calm those fidgety nerves.

9. Sleep Is Your Kryptonite

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Sleep is magical, really. When all your emotions are going haywire, and you’re feeling all the negative emotions it’s possible for you to feel, sleep is the way to go. When you wake up after an hour or even five, you’ll feel better. And if you miss out on your work, or on life in general, tell yourself that your mental health is important. As we said before, sometimes, it’s okay not to be in control.

10. Change your clothes

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As soon as you get home from a stressful day at work or school, change your clothes. You’re doing yourself a huge favour, because you’re telling yourself that you’re now out and AWAY from the stressful environment, and this will automatically calm your nerves. Don't be lazy about this; it takes practically no time!

11. Go To A Bookstore

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No, you don’t necessarily have to be a bookworm or even an avid reader to do that. The idea is to go somewhere public but private at the same time, and feel lost. And there’s something for everyone in a bookstore, so why not? Being surrounded by something other than electric devices is a strangely delightful feeling.

12. Indulge in Guilty Pleasures

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Once in a while, it’s alright to do this. Watch 'The Notebook' three times in a row and cry your eyes out, watch 'Keeping Up With The Kardashians' and laugh at the things you wouldn’t get to experience very often. Guilty pleasures exist to make you feel guilty for indulging in them; but we’d choose guilt over debilitating stress any day!

13. Do Nothing

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We all know what Winnie the Pooh said – don’t underestimate the value of doing nothing! Although this seems like an everyday thing, we’re always doing something, either physically or mentally. It’s important to know how beautiful it is to do nothing, and rest afterwards. Have an emergency exit for every day; you never know when it gets too much to handle.

14. Will This Matter When I’m Dead?

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Admittedly, this sounds more than a bit morbid, but visiting a graveyard -- whether literally or figuratively -- can help you reframe a stressful situation. No, seriously. This is so important and its funny that, although it seems ridiculous, it actually works! There’s just a slight possibility of going overboard and literally becoming stress-free, but if that’s what you’re aiming for, then seriously, ask yourself this question. And give yourself the answer.

15. The Internet Is A Friend

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We all know the important of plugging out of all forms of connectivity to feel better, but for those of us who have desk jobs, we can’t really afford to look away from our screens every 5 minutes. What’s the solution? A few of these websites that will turn your mood around!

Calm Make everything okay

Rainy Mood

Nicest place on the internet

Do Nothing

Noisli

The quiet place

Soundrown

Automatic

Flattery

Look at

something

Disgruntle me

16. Meet Your Happy Person

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Everyone should have this one person, their chill-pill, who can tell them to calm down and it just magically happens. People who light up after seeing you, or always have some comforting things to say are extremely important people who need to stay in your life, unlike the walking, talking black holes that suck the life out of you.

17. Water

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Try the Japanese Water Therapy (Drink 4 glasses of water immediately upon waking up in the morning); or you can be a bit more ridiculous and drink water upside down. That helps relieve stress and avoid hiccups. Swimming or any other water activity helps in lowering your stress levels. Being 70% water has its benefits, people.

18. Blow Up A Balloon

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No one can be stressed and grumpy while blowing a balloon. Try it. There’s just something humorous about having a sack of air lying around. Consequently, you can just try to balance a balloon, and not let it touch the ground. Hey, it’s a game for kids, but you can put two and two together and realise why kids always have a smile plastered on their face.

19. Distance Yourself From Triggers

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Being self-absorbed in your own world is a fantastic way to stress yourself out over things which are plain irrelevant. Simply stop being around thoughts or places or even people who make you anxious. Mini-vacations or 5-minute vacays are extremely helpful for those who cannot take the time out to personally work on individual stressors.

20. Find What Works For You

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Finally, don’t just take in the tips you read everywhere. Your body and mind are unique to you. What works for others isn’t guaranteed to work for you, but the road to self-discovery requires experimentation. These are all very relaxing but maybe your kind of de-stressing involves pushing walls and tiring yourself out physically. As long as it's healthy and it works, it's good enough for you.

What do you do when you're having a tough time? Tell us some of your de-stressing tricks in the comments below.

Wednesday, June 3, 2015

The Great Decoupling

I have blogged earlier about skill-biased technical change and widening inequality. In an HBR interview, Erik Brynjolfsson and Andrew McAfee point to the 'Great Decoupling' since the 1980s between economic abundance (as captured in rising percapita GDP growth and productivity) and worsening income and job prospects for typical workers.

This trend has paralleled the divergence between wages, which have been declining, and corporate profits, which have been rising.

Brynjolfsson and McAfee blame it on technology - as advances in information and communications technology made plant, machinery, and equipment prices to drop, companies shifted investments away from labor and towards capital. Even as low-skill workers have been replaced by machines or off-shored away, big data, analytics and high-speed communications have enhanced the productivity and value of skilled workers. The consequences of such skill-biased technical change include widening inequality, with all attendant social and political distortions.

As regards preparing the society for this changing world, they point to the need for fostering an environment that is conducive to innovation, new business formation, and economic growth. In this endeavor, they highlight five focus areas for governments - school education that treaches kids relevant skills, including creativity, inter-personal skills, and problem-solving; world-class infrastructure; more entrepreneurship; more liberal immigration; and investment in basic research (as businesses focus on applied research). Unfortunately, countries like India slip badly on all the aforementioned.

Friday, May 29, 2015

A cautionary note on India's metro rail ambitions

The Government of India have declared support for metro-rail in cities with population greater than 2 million, to be constructed as joint-venture between central and state governments. Accordingly, metro-projects are on the anvil in many cities. In recent months, the government has also been courting Chinese and Japanese investments in metro and high-speed rail networks.

Metro-rail, elevated or under-ground, is the most expensive mass transit mode. They impose massive upfront expenditures and consequent debt-financing burden, as well as high operating costs. It is therefore vital that the sustainability of each project is rigorously examined before its sanction. A failure to do so would leave local and state governments saddled with white elephants bleeding massive operating subsidies. It will also crowd-out resources from smaller transportation projects that deliver greater bang for the buck. A few considerations are therefore in order.

For a start, we need to eschew the notion of metro projects as an aspirational symbol. Our cities need good urban transit systems, not necessarily good metros. Based on traffic and distances, urban transit modes span a wide spectrum from regular bus services to bus rapid transit, and light rail to metro rail. Each city should identify the appropriate mass transit mode based on its demographics, economic activities, commute patterns, land-use density, and metropolitan configuration.

Second, evidence from across the world, developed and developing, shows that metro-rail projects, even the most efficient and with adequate traffic, are heavily subsidized. Not only do they consume massive public grants for construction, generally raised through taxes or government grants, but also their operation and maintenance (O&M) require large subsidies. In fact, the ticket collection receipts as a percentage of O&M costs, or fare-box recovery ratio, is generally much less than half the operating expenses. Even the highly acclaimed Hong Kong metro received just 28% of its income from fare-box receipts in the 2001-05 period.

Third, apart from demographic considerations, metro rail systems generally need a peak traffic of atleast 40000 passengers per direction per hour (phpdt) to make any commercial sense. Just a handful of our cities would meet this requirement, even two decades from now.

In countries like India, with fiscally strapped state and local governments and a very tariff sensitive demand-side, the risks associated with operating and maintaining good quality metro systems are considerable. State governments will find it difficult to subsidize metro rail systems for too long. Given the difficult political economy surrounding tariff increases, large volumes are the only insurance to atleast slightly mitigate commercial risks.

This assumes even greater significance since global and Indian experience show that reliable estimation of traffic is a problem with transport projects. This is no less true of our metro projects. In the anxiety to push through projects, governments and promoters make optimistic traffic forecasts – high economic growth rates, planned toll increases, unrealistic diverted traffic from other modes, and large induced traffic. Further, when the economy is on the upswing and financing is readily available, the disciplining forces of credit markets take a back seat. Post-mortems of such projects from across the world, done during their inevitable renegotiations, invariably reveal considerable optimism and froth in traffic and revenue assumptions.

Once traffic volumes fall short, governments are forced to subsidize and operators skimp on maintenance. The latter will pose considerable quality deterioration and safety risks, thereby engendering a downward spiral of lower demand, larger O&M deficits, and even more skimping. Furthermore, as these trends play out, the physical infrastructure of elevated metros, already a blight on urban form, will fall into disuse, dragging down property values in the neighborhood. It could be a very short distance from urban regeneration to urban degeneration.

Fourth, there is more to metro railway systems than mere mobility improvements. The most successful examples of metros are those which have used it as an instrument to guide urban growth by integrating mobility with land-use. Those cities have used metros to promote transit-oriented development (TOD) by encouraging high-density mixed-use developments surrounding metro stations. They have employed proactive planning in the form of higher floor space index (FSI) in the vicinity of stations to concentrate growth.

Such policies have helped cities like Copenhagen, Stockholm, and Singapore effectively manage the spill-over growth from the main city radially outwards in a planned manner. Instead of one massive urban sprawl, these metropolitan areas are characterized by a central core connected to smaller population centers interspersed with rigidly enforced green belts. Copenhagen has used the metro to develop a “finger plan” of radial growth of master-planned smaller towns. Singapore’s “Constellation Plan” involved the planned development of eight master-planned towns in the form of a “string of pearls” around the main city.

Unfortunately all our metros, including Delhi, have overlooked this objective. The new metro-rail projects for Mumbai, Hyderabad, and Bangalore present a rare opportunity to recover lost ground and profoundly shape the city’s growth trajectory through a TOD plan.

Policies like higher FSI and mixed-use zoning around metro stations promote density and transit use. These policies, when supported with investments to improve infrastructure carrying capacity, will encourage consolidation of land and vertical redevelopment. Affordable housing mandates, with more zoning relaxations and transfer of development rights, should be incorporated into these redevelopments. Another requirement for TOD is for the metro corridors to emerge from the metropolitan development plan and the strict enforcement of the region’s master plan. Since all such policies take time to yield results and require painstaking co-ordination among multiple agencies, they are rarely pursued with intent.

Finally, the burden of financing such projects can be cushioned by capturing a share of the increase in property prices generated by the metro through policies like betterment fees, tax increments, and registration cess. Innovative use of zoning regulations – land use conversions and height relaxations – can also be used to capture a share of the increase in property value due to the new infrastructure.

Metro rail projects that incorporate all these considerations, instead of being mere construction projects, can be powerful catalysts for urban transformation and smart growth.

Tuesday, May 26, 2015

The infrastructure financing problem

Where does infrastructure financing money come from? I blogged earlier about how, contrary to conventional wisdom, the overwhelmingly dominant share of infrastructure financing comes from bank loans and the bonds have a marginal role.

But for China, syndicated loans form the lion's share of infrastructure financing. The total annual infrastructure bonds raised have been around $10-12 bn for all emerging markets excluding China.

And about infrastructure debt funds, the amounts raised globally are minuscule compared to the requirement. Just $4.7 bn was raised in 2011, the highest ever raised globally in a year by infrastructure debt funds.

Infrastructure equity funds, which leverage capital from pension funds, while larger, tooform a small share of the total infrastructure financing and are concentrated in developed markets, especially the US and Europe. Globally, they formed just above $36 bn in 2013.

Furthermore, structured equity or debt financing - infrastructure equity fund, infrastructure debt funds, or bonds - is rarer still in the construction phase, where bank loans are the most risk-appropriate form of financing. So as India explores various infrastructure financing alternatives, it would do well to keep in mind the reality that bank loans would necessarily have to form the lion's share of infrastructure financing. Alternative sources like structured debt and equity can only contribute marginally. This again underscores the importance of restoring bank balance sheets and their recapitalization.

In any case, whether financed through loans or structured capital, rigorous project preparatory work is critical to the success of any long-term project. These projects will be able to attract private investments only if adequate preparatory work is done and rigorous enough feasibility and commercial viability studies and detailed project reports are available. Its preparation generally takes at the least 18-24 months. It may therefore be appropriate if, atleast to the extent of flagship infrastructure projects, a shelf of works are identified and their due-diligence and documentation initiated immediately, through public finance, and kept investment-ready.

Saturday, May 23, 2015

Diversify Your Insurance Portfolio

Insurance is a tool people use to transfer financial risks to an insurance company. Someone who purchases insurance to reduce his financial risks should logically then go one more step to further reduce the chance of an unlikely event causing him financial troubles.

Thus, it is worth diversifying one’s insurance portfolio where practical. Placing insurance policies with different insurers ensure that a person’s entire financial portfolio is not in jeopardy should one insurer collapses. While there are regulatory measures in place to protect policy owners in such an event, they are still under tweaking and remain untested. It is still prudent that one takes necessary caution not to put all of his insurance policies with a single insurer.

It is notable that different insurers usually excel in different policy types, i.e. Company A may have a very competitive hospitalisation policy whereas Company B provides the best term rates. Thus, it is fortunate that a financial portfolio designed to contain best-of-class financial products from different insurers already serves to diversify one’s insurance portfolio.

Even within a single class of coverage, it may be worthwhile splitting up a large policy into smaller ones. For example, Ritesh may require a sizeable Rs.20000000 of death coverage to provide for his wife and children should he pass away prematurely, or perhaps Rs.2000000 in critical illness coverage in the event he suffers a major illness. Instead of purchasing a single policy which covers this relatively big amount, he can opt to split it into multiple policies with different insurers to diversify his risks.

This gives him a few practical advantages.

While insurers in india share the same definitions of critical illnesses, they only cover 30 to 32 out of the 37 defined critical illnesses. What this means is that an insurance policy may not cover certain critical illnesses. Thus, for a greater peace of mind and more comprehensive coverage against critical illnesses, Ritesh should split his insurance coverage between at least two companies.

Furthermore, while insurers pay out upon the definition of the critical illness being diagnosed in the insured, there can be situations whereby the insured may not fully satisfy the criteria. Whether or not a payout will happen depends on the insurer’s discretion and goodwill. By placing all his coverage with one company, Ritesh places his fate in a single insurer’s hands and runs the risk of getting no payout. Diversifying his policies reduces the chance that he gets nothing at all – some insurers do pay a claim ex gratia despite not having a legal obligation to do so. Hypothetically, the insurer which does not pay Ritesh might feel compelled to do so if Ritesh manages to receive a payout from a competing insurer for the sake of reputation. Such is the importance of not letting a single insurer gain too much power over yourself.

In fact, applying for insurance cover with multiple insurers benefits Ritesh right from the start. If he is not in the best of health, he is able to apply for insurance with different insurers and see which companies offer the best terms, thereafter placing his business with insurers that give him the most favourable terms.

The downside is that diversifying comes with a little added cost as insurers usually give a slight discount for larger single policies. One has to weigh this added bit of cost into consideration when doing so. It also means a little more work which is nothing compared to the grief one might suffer if he places all his insurance with one company and it does not work out well. Besides, sorting out this work is part of what you are paying your financial adviser for.

An important function of purchasing insurance is not just for transferring one’s risk, but also for a peace of mind. There is no peace of mind to be said if all of one’s insurance is with a single insurer, no matter how large or supposedly stable that company is. In light of few events in past, it is clear that even big corporations are not infallible. Do the wise thing and play it safe.

Thursday, May 21, 2015

Mark Mobius on the market and volatility

Mark Mobius of Franklin Templeton expressed his views at the Morningstar Investment Conference held this week in London. He also spoke to Emma Wall, editor at morningstar.co.uk.

Below is an excerpt from his presentation and interaction.

The state of the markets across the globe…

Since 1988, there have been three bear markets. We're definitely in a bull market now. China is one example; it's really going up a lot. India has been doing very well.

Of course, in every bull market there will be periods of decline, there will be corrections which can be as much as 20%. But you could still be in a bull market over the longer-term.

Potential in emerging markets….

The headlines are usually very bad about Africa. But if you go on the ground, if you look carefully at what is happening, you will find out in fact there is a lot of opportunity, tremendous opportunity.

Take Nigeria for example, you read about Boko Haram and all these problems. But there are viable, great companies in Nigeria in which we've invested and they make money and they are doing very well.

Eight out of the top 10 fastest growing economies last year where African, thanks to supportive fundamentals – young populations, commodity rich and technology savvy. So much of Africa’s resources are untapped – both commodity resources and human resources. I think that Africa will soon emerge as the manufacturing hub of the globe.

Volatility….

Volatility has increased not only in emerging markets but in developed markets. In all markets now you are seeing much more volatility. Look at the price of oil, the way it's been jumping up and down. It doesn't mean that the demand for oil has changed that much, but the price has been very volatile.

Volatility may create investment opportunities – but it spooks investors, causing them to crystalise losses.

Market volatility is worse now than it has been in the past, thanks to quantitative easing – the huge volume of cash that has flooded global markets from money printing in the U.S., U.K., Japan and now the Eurozone. In the last 11 years there have been three instances of market underperformance but right now we’re on the up.

What threatens investors’ returns is volatility. We like volatility as fund managers because it creates buying opportunities but our clients don’t. Unfortunately the volatility index shows that market fluctuations are happening more often due to central bank policy. Investors will have to accept that there will be these bumps in the road.

Threats to the markets…

Derivatives pose the greatest threat to markets. There are $691 trillion in derivatives globally – but the global economic output is only $77 trillion. This seems an extremely high number.

IPOs…

Of the new companies floated on stock markets globally every year, 33% of them make their IPO in emerging economies. Of these, around 30% of them are suitable for investment.

In emerging markets, the problem is not so much corporate governance, but liquidity, because many of the new issues are small. So if they are running at maybe 0.5 million a day in turnover, it is very difficult for big funds to buy. So, I would say of all the IPOs maybe, 20-30% could be purchased by normal large emerging market funds.