Foreword: "What your Banker won't tell you"

Almost everyone in the world wants to have more money than they already have. (If you are not one such person, please do not read beyond this page.) However, the science and math of saving money and generating wealth is rather poorly understood. This book attempts to answer questions on wealth generation such as:

•What is financial planning?
•Should I stop buying gold and putting money in Fixed Deposits?
•Are mutual funds and SIPs really good?
•How to identify good mutual funds?
•How to make money in the stock market?
•If everyone made money with real estate in the 20th Century and 2000s, why won’t my property appreciate in value?
•What about ULIPs? Insurance? “Retirement funds”?

However, one of the first rules of investing and becoming wealthy is to spend what you need to, after saving, and not vice versa. If you do not have a saving mindset and would rather have that expensive dress/ watch/ dinner at a high-end restaurant versus owning that incremental share or mutual fund unit or fixed deposit, no amount of information can help you.

The first step to becoming wealthy is to become addicted to saving money. Without that, nothing will work.

Get the book here: https://amzn.to/3kxPqkL

The vicious cycle of poor quality, high cost education and how it deprives our country of enterprise

In many ways, I am a cliché. I am an engineer and an MBA (General Category, if you must know), and I then entered the corporate sector to draw a salary that helps pays bills. I studied very little and somehow managed to crack two entrance exams. In many ways, I was a misfit – I was the exception that managed to make it precisely because I hated rote-learning, precisely because I hid novels in my Resnick Haladay or my FIITJEE DPPs. Precisely because I “wasted time” in debate and quiz club in school, when I could have been mugging up Chemistry.

I have worked for almost a decade in the corporate sector and let me tell you that despite being from among the best B-Schools and among the best Engineering Colleges, not one subject (OK, maybe just the one) prepared me for corporate life. Sample this – I came across this problem when my daughter was scribbling on one of my old FIITJEE copies.

Problem 1 - Hunter and Monkey. A monkey hangs from a branch at a height h above the ground. A hunter stands on the ground at a distance R from the tree, and is pointing his gun at the monkey at an angle (theta) to the horizontal, as shown in figure (1):

If the monkey jumps down from the tree at the same time as the hunter fires the bullet, what should be the value of theta, to hit the monkey?

In some way while I was doing these kind of problems at FIITJEE, I always thought my future career would involve monkeys and hunters, or mechanical contraptions mimicking the monkey and the hunter. For me, in 11th standard, the breaking point was fluid dynamics and organic chemistry. Both stumped me completely – but being the perfectionist that I was then as I am now, I continued to go at them never really understanding either, until the syllabus had moved so far ahead that I had to give up.

I decided to focus on NCERT and board exams early in 12th, giving up on IIT. IIT anyway meant nothing but a high paying job to me, and I figured I could eventually put my mind to anything and eventually make money doing it. Sadly, fates conspired for me to clear DCE’s entrance exam (DCE had a separate entrance exam then) and I ended up becoming an engineer.

However, once I entered engineering college, I realized how advantaged I was precisely because I had not given up my life to focus on IIT. (Some of my batchmates will disagree but) I had a rounded personality, I had leadership traits, and most importantly, I had developed a joy for reading that made me both read and comprehend English at almost lightning speed. When I (inevitably) began preparing for CAT, I realized how far ahead I was, needing almost no preparation for English Reading Comprehension, but quite a lot for DI (I hated DI with a vengeance).

MBA entrance exams like CAT were far easier than engineering entrance for me, and I ended up in FMS. It was then that I ended up meeting a hundred odd people like me – talented misfits, great at one or many things, super smart and fun to work and learn with. The one class we had in FMS which still helps me was IT or Computer skills, in which the Professor taught us Excel and Word tricks that put most of us ahead of the field when we joined the corporate world.

It was when I started working that I realized how useless my entire education had been. Yes, education had given me a scientific temper which helped me understand medium to difficult statistics (needed in most of my roles so far), and it had given me Microsoft skills, but beyond that it was my love of reading, my public speaking experience and my (decidedly moderate) curiosity developed by quizzing that helped me. Work was about communication – both written and oral, influencing people without authority or with authority, nurturing people and getting things done. My formal education did zilch to prepare me for any of these. It was quizzing and non-fiction that gave me a love of learning and not the monkey/ hunter/ parabola, or the formula of some ether molecule in organic chemistry. It was my debating experience that gave me a fearlessness of speaking in public (and speaking my mind!). And it was the novels that I hid in my course books that gave me a command over the English language (and the annoying habit of needing to write books and articles like this, you might say).

Our education system is broken and there are now startups who will charge parents thousands or lakhs of rupees to help get their children ahead in this broken system. But none of these startups teach vital life skills. Our schools and colleges also make essential life skills optional, so that only the few like me who have an interest or were nudged into some of these hobbies by their parents, manage to gain vital life skills. They condition us to not dream but mug up, to filter out the wrong options from four multiple choice questions – not teaching us one bit about how life and work are all about people and managing or influencing them. And thus, they condition us to follow the trodden path – mug up, get into a decent college, do a post-grad and sit for placements. 

Not that I would have been an entrepreneur, but clearly the minority of India born multinational organizations and their lack of scale is a symptom of our education system which dis-incentivizes risk taking and teaches only about exam management. Yes, our poor labor law, land law and tax law system is to blame, but then isn’t the education system to blame for that as well? The average bureaucrat or politician who is a product of the same education system, cannot even comprehend the scale of a US tech behemoth (think Netflix, Google), and thus cannot think big, cannot dream.

It would be awesome if people put life skills ahead of marks for their children, and celebrated accumulating them. All my education got me (for the most part) was a foot in the door, but the right system would help our children create doors of their own, wherever they want.

And not waste their growing years solving problems about monkeys, hunters, bullets and pulleys. Or worrying about where to put the covalent bond in an ether molecule.

Times of India Movie Reviews: The Freakonomical Scam Underneath (Part Two)

So ever since I wrote on this topic (read Part One here), I have been getting congratulatory emails, requests for the data I used to run the analysis and a few emails/ comments on my post contesting the validity of the analysis. I think some people didn’t really get it. What I had analyzed, hypothesized and then proven using data was that the gap in movie review ratings between TOI and IMDB (and not the actual rating on TOI itself) moves up whenever there is a bankable star in a movie.

However, I just wanted to take this data analysis further. (So expect there to be a part three or four as well later.) Just to silence the handful of critics my previous article attracted, I ran something that could conclusively prove TOI’s complicity in scamming the public (apropos movie reviews). 

As I had explained in Part One, I have been, for some time, particularly pained by the disparity in TOI’s movie reviews versus reviews by independent reviewers like Masand/ Anupama Chopra. So what I did was take down movie reviews for 100 movies and compute the gap in movie ratings between TOI and IMDB (arguably the most unbiased movie reviewer possible).

Aside from my discoveries in part one, what is more damning is that the average movie review gap between TOI and IMDB goes up by a whopping 360% if the budget of a movie is higher than INR 32.76 Crore. (32.76 Crore was the average budget of the movie data set I analyzed.) In simpler terms, on average the gap in movie reviews between TOI and IMDB moved up by 4.6 times, if the budget of the movie being reviewed was higher than the average of the data set, which was Rs. 32.76 Crore.

At the median, the disparity is starker. The median gap in movie reviews between TOI and IMDB moved up by a mindboggling 6.5 times, if the budget of the movie being reviewed was higher than the average of the data set, which was Rs. 32.76 Crore.

 

So there you have it… We have a hypothesis that stands the test of the monetary challenge thrown at it. Higher the budget, higher the gap in movie review ratings between TOI and IMDB, which should only mean one thing – a part of the higher budget is being allocated to reviewers like TOI.

Times of India's Movie Reviews: A Scam of Freakonomical proportions

I have been a loyal TOI reader since I was about ten. Since then, my daily routine has revolved around reading the newspaper. I was also, in my school days, a TOI Young Journalist for two years and fleetingly considered a career in journalism. 

If you read a paper for a decade and a half as I have (and for several decades as have my parents) you grow addicted to it… you begin to take it seriously. The newspaper business is all about loyalty. People will tell you their breakfast/ tea didn’t go down that well if for whatever reason, they could not grab hold of their favourite newspaper (which was, by the way, a common occurrence during all my childhood vacations with my mother.)

Anyhow, back to me. What I did, when I did not become a journalist, was to become an engineer and an MBA. What that gave me in turn, was an introduction to several simple yet powerful mathematical tools… some of which I will showcase here today…

I have been, for some time, particularly pained by the disparity in TOI’s movie ratings versus ratings by independent reviewers like Masand/ Anupama Chopra. From a point where you could blindly trust TOI to rate a movie honestly, things have come to such a head that you need to verify the TOI’s movie ratings with more independent sources before making a movie-watching decision.

So here’s what I did using the modicum of mathematics I remembered from my engineering and MBA days. I painstakingly took down the ratings of 100 Hindi movies from TOI and from IMDB in an excel and then, subtracted the IMDB Rating from TOI’s Rating to create a dependent variable I shall call “Gap in Ratings”. I also googled extensively for the movies’ production budgets (this removed three movies from my data set whose budgets I could not find on Google: Filmistaan, Rangrezz and O Teri). On top of this, I added an (econometric) layer of whether the movie had a “bankable” star like one of the Khans (Saif included), Amitabh Bacchan, Akshay, Ajay Devgan, etc... And then, I ran a linear correlation and several regressions (going up to the power of seven), just to see if there was a pattern with which the “Gap in Ratings” between TOI and IMDB varied.

Just a snapshot of what the data looked like is here:

I found that there was a 47% correlation between the gap in movie ratings on TOI vs IMDB and the budget of a movie. Now what that technically means is that 47% of the value of the variable “Gap in movie ratings on TOI vs IMDB” can be explained by the independent variable “Budget of a movie” while the remaining 53% is determined by other factors. But 47% isn’t really strong enough; there’s still 53% that’s explained by factors we do not statistically understand (or haven’t accounted for).

What, however, is infinitely more interesting is that if you take the average gap in ratings between TOI and IMDB for movies with non bankable stars, it comes to +0.38 points on a scale of 10. However, throw bankable stars into the mix and the average gap in ratings between TOI and IMDB goes up to +1.11 on a scale of 10. 

That’s a 190% jump in the average gap in ratings between TOI and IMDB if a movie has a bankable star. Meaning, in non mathematical terms, the disparity in ratings given by TOI vs IMDB on average goes up by 190% if the movie has a bankable star. 

(For the record, I have counted the Khans including Saif, Sanjay Dutt, Akshay Kumar, Ajay Devgun, Hrithik, Ranbir, the Deols and Emraan Hashmi as bankable stars… bankable stars, by definition, are the marquee stars whose films always make money or are supposed to always make money, anyway)

Since averages can sometimes be skewed by a couple of data points, let us now look at medians. So if you take the median gap in ratings between TOI and IMDB for movies with non bankable stars, it comes to +0.2 points on a scale of 10. However, throw bankable stars into the mix and the median gap in ratings between TOI and IMDB goes up to +1.3 on a scale of 10. 

That’s a whopping 550% jump in the median gap in ratings between TOI and IMDB, if a movie has a bankable star. Meaning, in non mathematical terms, the disparity in ratings given by TOI vs IMDB at the median goes up by 550% if the movie has a bankable star.

Another interesting fact – if you look at movies with bankable stars, the minimum rating TOI has given (for the 97 movie data set going back a couple of years) is 2 (out of 5) whereas the least rating for a movie with a bankable star on IMDB is 0.85 (out of 5).

That’s a 135% higher minimum review, seemingly guaranteed, by the TOI.

Since numbers cannot lie, it is highly likely that the rumours doing the rounds in media circles are true and TOI actually charges money for maintaining a minimum guaranteed review. Consider this – Humshakals, a movie panned universally by almost all critics, got three stars from TOI. Himmatwala got 2.5, as did ‘The XPose’ and Rangrezz – all movies which were universally buried by the rest of the movie critic universe. The list goes on and if you are really interested in doing your own data analysis or going through my numbers, reach out to me at vaibhavrainmaker@gmail.com.

So where does this take us?

One – TOI is most likely on the take whenever there is a big budget movie with a big star involved to give them a Minimum Review of at least 2.5 or 3. If the movie is terribly terribly terribly terrible, the Minimum Review guarantee falls to 2 (eg: Chatur Singh).

Two – if the movie has a bankable star, just shave off 0.55 points off TOI’s review from a statistical point of view to arrive at its actual watchability potential.

And, dear Times of India, if you are reading this, you just lost a loyal reader. 

PS: Data analysis done on 97 hindi movies with available budgets. 41 of these had “bankable” stars.

 

The View

As I stood on the balcony of a flat my parents were thinking of buying, my gaze fell upon these three girls in the distance. Now this was at best a semi- urban locality (we can’t afford anything urban) yet there were cars around- the same cars you & me drive and more to the point, these three girls looked like any other three girls I might have seen anywhere in Delhi. They were carrying notebooks- all of them and two of them held books that looked familiar- books I might have purchased whilst starting my preparation for IITJEE in 11th standard. I never actually read anything beyond the preface in either of them because that was sadly, the most interesting thing about them. You see the sad part about preparing for IIT was that none of the theory told a story- the prefaces did, which is why I will have read only the prefaces of most of the prep books. But don’t tell my mom I did that or hid Archies Comics in my Resnick & Halladay – she would be heartbroken.

Before I allow myself to digress any further, let’s get back to the story of the three girls (which isn’t much of a story, actually). Thing is seeing them carry these books, no doubt to the nearest tuition center, made me sick to the pit of my stomach. It reminded me that here I was- the ultimate fraud- no good at anything, having lived- having achieved what these girls were carrying Resnicks & Morrisons & worry laden expressions to achieve and having never gone beyond the preface of any serious theory book- having hardly studied for any of my exams at all. And this was metaphorical; me- undeserving with no books- no worries, standing above looking down upon those with both, yet those who had nothing. One of nature’s truest cruelties.

Thus, I pity those I met who pride in themselves for having cracked the best company on campus or CAT or for being a Stephanian or a DPSite. As a certain Prof. Singla (FMS) and before him, an even more certain Prof. Anand (FMS) said, “You are here only because somebody somewhere somehow made a mistake.” I wish people didn’t wear pride on their sleeves but carried it deep underneath- a weapon to be used at the last resort. I cracked two of the tougher exams in this country- but if I used that and largely that to define myself, I will have lived a hollow life, won’t I?

Reservations: An Insider’s perspective

I have always had reservations about reservations. On the other hand, a number of my good friends are quota- beneficiaries. But that doesn’t make reservations go away.

I still tease my mother for not marrying a scheduled caste or tribe or muslim or OBC or kashmiri pandit or even Sikh. She had to go on and marry an upper caste Brahmin, leaving me bereft of all quota advantages. There was nothing called “family planning” in those days perhaps…

Having had the benefit of hearing both sides of the argument and reading about it extensively, I have formed my own moderate opinion. True, I am aggressive person and ergo, my first impulse is that quotas in any shape or size must be done away with. The true cause of OBC/ SC/ ST backwardness is the poor primary education system in our country. According to statistics, only 1% of all girls in rural India complete their education upto twelfth standard.

50% reservation in all institutions of higher learning is a staggering figure. The SC- ST experiment has shown has that merit suffers in the face of reservations. Throwing 50% of our premier college seats to the one-eyed amongst the blind is intellectual suicide.

True these classes are oppressed, discriminated against, but not necessarily deprived. The issue (as most anti-quota organizations will put it) is of deprivation versus discrimination. The question thus, is do you offer admission to a person who has been discriminated against or to a person who is deprived in any possible way (physically or economically)? It is not an easy question to answer. But tangible political gains have shunned this question to the background.

I think (as a born-again moderate) that reservations to the tune of 10% should suffice for discrimination. A higher percentage (maybe 15-20%) might be sought for all sorts of deprived sections. Social discrimination is a much lesser deprivation. After all being an SC-ST-OBC is just not the same as not having one limb. But in premier institutions where seats are scarce, 50% reservation (even with an increase in general category seats) is a sorry joke.

And with benefits like job reservations knocking at our doors, the day is not far when people will proudly (like doctors or PhDs or members of prestigious societies) introduce themselves as “Mr. Ram Kapoor, OBC.”

Where the AAP shall fail

There are several political commentators who are earning their daily bread nowadays by singing either paeans of praise or by throwing brickbats at the Aam Admi Party. There is a fervor in a large section of India that reminds one of the revolutions orchestrated by Bhagat Singh & Co, Mahatma Gandhi, the heady Babri Masjid days, etc. Never has a muffler and a cough struck more terror in the hearts of politicians than it has now.

I will allow the marketers to comment and revel in how Kejriwal has gotten his marketing strategy cent per cent right. First, he has captured the blue ocean plank of anti corruption- a plank that no other party in India can lay claim on. Second, by using brand symbols such as the jhadoo and the common man topi, if by nothing else but sheer symbolism, Kejriwal has come to match Gandhi in his use of the charkha and the loincloth as symbols of his revolution. For that, I must congratulate the AAP and its multiple media advisors.

However, as the movement transitions into government, it quickly disintegrates into rot and decay as has every other revolution in this country. Even the Congress was once a revolution to overthrow the British (a rather moderate mediocre revolution but for Gandhi; for a long period, Congress’ role and vision was to simply co-exist with the Britishers)… and look where it is today. The rot in Congress can be aptly summed up in one unfortunate brand symbol. Robert Vadra’s greased palm.

But again, this has been spoken of too; so I will move on to talking about something that I have come to notice about the nature of revolutionaries. Revolutionaries (in India at least) are men of the people. Populists. Which means that they will, put people or the idea of benefitting the people or better put- the public image of benefitting people, before the long term vision of welfare of a nation. 

Sample Bhagat Singh. Great revolutionary, incredibly sharp and undoubtedly a Kejriwal of the pre-independence era, Bhagat Singh’s dream was to set up a socialist party if & when he and his band of revolutionaries were to wrest control from the British government. Sample Gandhi or Nehru too then, who having wrested control from the Britishers, chose socialism over capitalism, thus condemning three fourths of this country to poverty, for decades. A scenario which changed only when an economic crisis forced the government’s hand in 1991.

The point is- every political party in India has realized that populism is a sure-fire way to win votes. And even neo revolutionary parties like the AAP will find it hard not to lean towards populism. And sample their first moves in power- subsidizing electricity bills, water bills, getting policemen suspended… everything as populist as Arvind’s aam admi topi. 

A revolution enchants people and when it ends, to continue that charm and enchantment, it requires the crutch of populism. Which the AAP is slowly turning towards. 

Let’s hope the clutch of corporate honchos joining the party can change Arvind’s mind. Otherwise the AAP will turn out to be another Congress in ten years.

A government’s only real job is to build roads; by roads, I mean power lines, water canals, highways and other associated infrastructure. And then sit back and let people build their own lives. Not give people a massive dole to sit at home and do nothing as the MNREGA does. 

So even though Mr. Kejriwal might be pure in his intentions, the only way his revolution can retain its lustre is for the AAP to stop being for the people. It needs to be for the nation.