Quality Stocks? Give me a break...

It is quite funny to read this news article on Bloomberg.

 

Apparently a couple of analysts from Credit Suisse have suggested investors to pick 'Quality' stocks after the Satyam fiasco. Who in their wildest dreams would have ever, ever imagined that an organization like Satyam, praised for its excellent corporate governance would have a fall as big as this. There were brokerage houses (incl. Credit Suisse) and investment companis that recommended Satyam a BUY when it was Rs.500+ in 2007. It was no different in 2008 as well even when the markets were in turmoil. Ordinary investors, not as savvy as the brokerage houses or the FII's etc had to merely rely on such recommendations and either Buy, Sell or Stay Invested.

 

I would rather expect such analysts to shut their mouth and look into suggesting something that might help the common man out there who might have invested a substantial amount of their savings made over several years into such companies rather than further confuse and misdirect them. To me, even while I had made money and lost at times, I've considered stock markets to be legalized casino / betting arena. Despite this, I only pity the investors who might have lost a significant portion of their savings in one go and not to forget the employees, the most pitiful lot...hope there is light at the end of the tunnel and not a train!

The good old school days

Just been to drop my kid at her school which reopened yesterday after the annual vacation and the scene apparently brought back nostalgic memories to me when I saw a few kids freaking out, probably their first days in school...the teachers and parents seemed to have jumped into a wrestling ring and trying to overpower the little one's. I was absolutely no different while I was in kindergarten too (my daughter is an exception!), my dad used to hijack me off to school, the teachers and aaya's were dreaded at the sight of me in the car ...gone are the days when I had nothing to worry of besides the school ;-)

Corporate Governance? My foot!

Considered to be one of the top IT companies in world, Satyam Computers, managed by its Managing Director, Ramalinga Raju, had to bite the dust in what could probably be the darkest days of India Inc and Indian Stock Markets. Their balance sheet being inflated by a whopping Rupees Five Billion (Rs.5040 Crores), board members not having knowledge of the latest (latest? this must have been going in for years!) situation, accrued interest of Rs.376 Crores, etc, etc would have definitely been a rude shock to the whole world for having entered year 2009 with full of uncertainties. Their stock prices on NSE, plunged from Rs.280+ a fortnight ago to Rs.40 (7th Jan 2009, close). To make it even more wild, their previous close, as on 6th Jan was Rs.180, thereby falling more than 75% in a single trading day!!!

Satyam's auditors, the high profile PriceWaterhouse Coopers would not be spared either. While no one knows or could even predict the outcome of this saga, the Foreign Institutional Investor (FII) confidence in India Inc is sure to do go down the drain and the Indian stock markets, once considered to be one of the best emerging markets, is definite to crash as well. It is quite surprising how a scam of such a large magnitude had 'escaped' the auditors, SEBI, Stock Exchange Boards in India, US, etc. While the masses rightly smelled a rat right after the maytas (Satyam spelled reverse) episode, a super large corporate with 53000 employees worldwide sinking in less than 2 weeks after that is quite astounding! Raju was always considered to be one of the smartest amongst his peers in India Inc, but this is something...

 

Oh, and I am personally and deeply disappointed about the whole episode at Satyam since it was one of my favourite and most profitable scrips in Dalal Street...sigh!