Digitising thoughts

and getting immortal on the fly

Archive for December, 2007

Accountant talk

Posted by Sathyamurthy www.sathyamurthy.com on December 29, 2007

My friend who is also an accountant was chatting with me. Since I live alone, he asked me if I cook.

The conversation went like this.

Friend: Do you cook or eat out?

Me: I cook, both at office & at home

Friend: You have cooking facilities at the office also?

Me: No. In the office, I cook the book; at home, I cook (referring) from the book!


Posted in Humor | Tagged: , | Leave a Comment »


Posted by Sathyamurthy www.sathyamurthy.com on December 19, 2007

Accountants – Love them, hate them, you can’t ignore them

What’s the definition of an accountant?
Someone who solves a problem you didn’t know you had in a way you don’t understand

What’s an accountant’s idea of trashing his hotel room?
Refusing to fill out the guest comment card

What’s the most wicked thing a group of young accountants can do?
Go into town and gang-audit someone

What does an accountant say when you ask him the time?
It’s 9.18 am and 12 seconds; no wait – 13 seconds, no wait – 14 seconds, no wait……

Why did the accountant stare at his glass of orange juice for three hours?
Because on the box it said Concentrate.

The accountant’s prayer:
Lord, help me be more relaxed about insignificant details, starting tomorrow at 10.53:16 am, Eastern Daylight Saving Time.

Conversation between two accountants at a cocktail party:
“…….and ninthly…”

What do accountants suffer from that ordinary people don’t?

How do you know accountants have no imagination?
They named a firm PricewaterhouseCoopers

What do you call an accountant without a spreadsheet?

If an accountant’s wife can’t get to sleep, what does she say?
“Tell me about work today, dear”

Why do accountants get excited on Saturdays?
They can wear casual clothes to work

How do you know when an accountant’s on holidays?
He doesn’t wear a tie to work and comes in after 8.30

What does CPA stand for?
Can’t Produce Anything

What’s an auditor?
Someone who arrives after the battle and bayonets all the wounded

Why did the auditor cross the road?
Because he looked in the file and that’s what they did last year.

Why did he cross back?
So he could charge the client for travel expenses.

How many auditors does it take to change a light bulb?
How many did it take last year?

How many cost accountants does it take to change a light bulb?
Hmmm……..I’ll just do a few numbers and get back to you

Laws of Accounting

1. Trial balances don’t
2. Bank reconciliations never do
3. Working Capital does not
4. Return on Investments never will

A fool and his money are soon audited

A lady goes to see her doctor with some worrying symptoms and he examines her.
“I’m sorry,” he says “but it’s bad news. You have only six months to live.”
The patient says, “Oh Doctor. That’s terrible. What should I do?”
The doctor says, “I advise you to marry a CPA.”
“Will that make me live longer?”
“No,” says the doctor. “But it will seem longer.”-
No offence- hahahaha

An auditor is checking the books of an airline. He is puzzled by the excess use of fuel on a Melbourne to Canberra flight. He rings up the pilot and asks for an explanation.

“It was late at night’” says the pilot, “Canberra was covered in fog and I lost my bearings.”
“I’m sorry,” says the auditor, “but you’ll have to bear the cost yourself.”
“The cost of what?” asks the pilot.
“Of the bearings you lost.”

Accountant after reading nursery rhymes to his young child:

“No, son. When Little Bo Peep lost her sheep that wouldn’t be tax deductible, but I like your thinking”.

Posted in Humor | Tagged: , , | Leave a Comment »

5-step guide to locating a ‘wealth creator’

Posted by Sathyamurthy www.sathyamurthy.com on December 16, 2007

The first rule to investing is ‘Don’t lose money’. The second rule to investing is ‘Don’t forget rule no. 1’! It is essential to stick to these rules when it comes to investing, in order to avoid the possibility of capital erosion.


To apply these rules successfully and to create wealth through equity investing, Raamdeo Agrawal, Director & Co-founder, Motilal Oswal Financial Services identifies five parameters that you must evaluate. They are:


1. Assess the entry barriers created by a company


Entry barrier should be preferably intellectual in character


Remember, a stock is nothing but a stake in the company’s business. So, observe the company’s business and the entry barriers created by it. The entry barrier should be more ‘intellectual’ in character rather than ‘physical’. This is because while it is next to impossible to compete with a strong brand (an intellectual barrier), competitive advantage associated with a piece of land (a physical barrier) disappears when a competitor acquires one as well.


Strong brands such as ‘Thums-Up’, ‘Parle-G’, etc. have enabled their companies to retain the top spot. However, at times, there could be exceptions. For instance, the entry barrier associated with TISCO would be its large base of iron ore and coal, which allows it to lower its raw material cost drastically vis-à-vis its competitors for long time to come.


Entry barrier should be long-lasting


An entry barrier should not only be strong, but also long lasting. Such companies will keep making money because their entry barriers keep working for them. For instance, Britannia may not be the best managed company but its strong brand continuously earns money for it.


Buy into such companies at the earliest


As an investor, buy into such businesses ahead of the crowd. If an entry barrier has been established very recently, it may not yet be exploited by the business. Accordingly, the market would not have valued it in the company’s share price.


For instance, when Financial Technologies (promoters of MCX) got its commodity exchange license and launched it, the popular opinion held was that it would be unable to execute the business well. But, today, it has emerged as a premier commodity exchange. Investing in such companies before the market sees their potential delivers best appreciation.


“Though difficult to practice, think ahead of the crowd”


2. Management should be competent and passionate


Choose companies that are led by a team and are competent and passionate. Both these attributes are equally important. Competence or passion alone will not work. An individual with a local degree combined with passion would have greater growth prospects than one who has a Harvard degree but no passion. A company like Pantaloon Retail is a shining example of how passion can create wealth.


“The definition of a great company is one that will remain great for many years”


3. Management should have integrity


Integrity is the most crucial quality that a company’s management must have. Such companies not only run their businesses in an honest manner, but, are honest to all their stakeholders, whether they are employees, the government or the shareholders. 


If honesty is part of a company’s DNA, it will be fair to its smallest stakeholders – the minority retail shareholders. Companies such as Tata and Infosys have this quality, which has added to their growth and market attractiveness immensely.


“Without management integrity, no margin of safety can be high enough”


The above-mentioned three characteristics (long lasting intellectual entry barrier, competent and passionate management and integrity) must all be simultaneously present in a company that you choose to invest in.


4. Buy low


The price that you pay for a stock determines your rate of return. So, it is essential that you get your purchase price right. While some companies come out on top with respect to all the first three parameters, the returns falter when it comes to the purchase price.


For instance, HLL comes on top with respect to all the first three parameters but has not delivered as much as far as its stock goes. Its stock delivered a CAGR of approximately just 3 per cent over the last 5 years, when the market delivered a CAGR of approximately 44 per cent over the same period.


The quote – “In the bible it is said that love takes care of a lot of sins. In investments, purchase price takes care of a lot of mistakes” – is very apt. You can make mistakes on assessing the first three parameters, since they are subjective in nature, but getting the right purchase price covers up for all your mistakes. Hence, estimate the expected value / intrinsic value of the company and keep an adequate margin of safety in the purchase price.


“It is much more important to buy cheap than to sell dear”


5. Have patience


When you buy a house you don’t expect it to appreciate overnight. You look at its appreciation over a long period. The same goes with equity. After having bought a company that conforms to all the above four criteria, you need to have patience. Investing in equities is often driven by two emotions – greed and fear. And patience is the mantra that helps overcome these emotions. Patience makes the difference between investing and speculation. It’s like a fertiliser to the investment process.


“In reality, patience is crucial, but it is a rare commodity”


End note


Investing is laying out today’s money for more in the future. Its about performance of the underlying assets. Success in investing is the outcome of a disciplined approach.


Happy Investing !


Raamdeo Agrawal, Director & co-Founder, Motilal Oswal Financial Services

Credits: http://www.economictimes.com



Posted in Uncategorized | Leave a Comment »