The Asif Khan Blog

Carsharing and its implication

Posted on March 7, 2014 by Guest

Ning Zhao works for IBM Germany as an IT Specialist and Application Development Consultant, serving the banking and insurance industry, among other industries. She started study of Computer Science in the University of Kaiserslautern in 2001 and has lived in Germany since then.

A strong interest in Artificial Intelligence grew in her during the study and she developed an intelligent multi-criteria optimization system for managing cooking plans as part of her thesis. After graduation, she served as system engineer in HaCon Ingenieurgesellschaft mbH, the biggest software service provider for railway companies in Europe for three years.

Ning has attended a number of online courses on finance on her own time. Asif and Ning were teammates in the Stanford Venture Lab (now Stanford Online) course “Finance”, where she was the team leader. The team did a good job and our performance ranked 18th among 800+ teams from all over the world.

Understanding Carsharing

Many are familiar with the car renting business. Car renting companies such as Sixt, Avis, Hertz are operating all around the world. In recent years, in Europe (especially Germany) a more flexible and efficient business model of car renting, namely carsharing, has emerged and flourished.

Around the year 2000, some carsharing companies started their business in Germany: Cars to share were available in some designated “resource pools”, which are usually some reserved slots in public parkings. From there, users can pick up and return the cars. People need to subscribe to a service plan to use shared cars. A subscriber will get an IC card, which can be used to open the doors of cars and account the mileage/rent time. Before using a car, you must do the reservation via service provider’s call centre or website. The carsharing business soon spread to many cities in Germany. Sometimes, there might not be enough cars in a certain resource pool. Such cases occur more often in small cities or villages. In big cities, cars and resource pools are ample, availability of the service is usually not a problem.

How the model works

A typical carsharing service plan usually requires an account opening fee and then monthly fee. Actual renting cost is calculated on mileage and rent time. It will be mailed to the users, in addition to the monthly base fee. The billing mode is quite similar to a mobile phone service plan.

In year 2007, my family moved to a small city in northern Germany, and used a carsharing service for a while. At that time, if I don’t remember wrong, monthly fee for a single subscriber was 6 Euros (all direct family members with drive licenses are qualified to use the service in a family plan). Each minute in use cost extra 0.27 Euro (the exact figure might be wrong, but the size should be right). If the mileage exceeds certain upper bound, such as 500km in one rent, added fee per kilometer will also occur.

So if you want to use the car for not a short while or for very long distance, carsharing can be very expensive. Renting a car for one or several days from operators such as Sixt will be more cost-effective. The fee-structure of the carsharing business encourages short-time-span, short-distance car renting, and implicitly increases the usage of the cars (less parking time) and diversified the users of a car (more people are served by a single car). I would say, this is also a good case of social engineering, where new business model helps the optimization of a variety of resources.

Big players getting in

In year 2008, Daimler launched its “car2go” business, an upgraded version of carsharing. “Upgraded” in the following senses:

* The picking-up and returning places of car2go cars are no longer restricted in designated resource pools. You can park a car in any public parking places and close a rent. Next user can use the car right from where you leave it.

* Privileged parking slots in big public places, such as airports or supermarkets. Yes Daimler has closed deals with such business entities to push the car2go business. It does offer convenience to the car2go users.

* Reservation is possible, but no longer necessary. You can use an available car nearest to you without any reservation.

* No monthly fee required. You pay only for what you use.

Success of the model

According to Wikipedia, as of February 2014, car2go operates over 10,000 vehicles, which serve eight countries and 25 cities worldwide with over 600,000 customers. As what I heard in October 2013, the car2go business in 3 of the 25 cities were already making profit. Car models in operation varies in different cities. In deepest markets such as Hamburg, Berlin, Düsseldorf, etc., both traditional gas cars and all-electric cars are in operation. In Stuttgart, where Daimler’s headquarter resides, the car2go business was introduced a bit later but with the latest generation of her all-electric Smart cars only. All car2go cars in Stuttgart are equipped with on board navigators, air conditioners and radios (Some background: the technical configuration of typical German family cars is still very conservative compared to the rest of the world. When you buy a new non-high end car in Germany, features such as air conditioner, radio, electric windows, etc., usually have to be required explicitly).

At the beginning, 300 e-Smarts were in service in Stuttgart. The figure has exceeded 500 by now. Charging stations are very easy to find. The business operator monitors real-time status data of the cars. If the power level of a not-in-use car is running low, a staff will drive it to the nearest charging station to ensure its usability.

How do they keep the cleanliness of the cars? Well, before you can start the car, you have to rate the cleanliness and tidiness of the car. If the previous renter has bad manners, the service operator will know and maybe extra fee for car maintenance will occur.

Car2go mobile apps are available on all major app stores. This app, can help user to locate available car2go cars nearby, display each car’s information such as remaining power level, technical configuration, etc. You can also reserve a car with this app. The current fee schema is like this: 0.29 Euro per minute, 0.19 Euro per minute for parking between drives. 14.90 Euro per hour, or 59 Euros per day. Mileage exceeding certain upper bound must be paid extra. Insurance included. Obviously, this schema still highly encourages short-time-span and short-distance drives.

In Germany, other players also provide services similar to car2go. BMW’s DriveNow is one of the choices. Friends from Düsseldorf told me, in his city, DriveNow is running Mini Coopers, which is an attraction to many style-aware people. BMW’s all-electric models are in the DriveNow game too. It is said that Daimler and BMW have closed a deal: without any administrative ado. A registered Car2Go member can use DriveNow’s service and vice versa.

Conclusion

Mathematicians must be able to construct a model to optimize the number of shared cars in a city, such that people’s logistic needs are met and at the same time, minimal cars are idle. Theoretically, such optimized carsharing model will offer many benefits to places where population is dense.

For individuals, they get the freedom and convenience of driving at low cost – the fixed and variable cost of owning a car is very high; For the society as a whole, more people are able to enjoy the freedom and convenience of driving while less cars must be produced, which is positive to our environment and reduces the need for parking places.

However, the other side of the coin is less demand for private cars. I don’t think every party want to see this, at least in the imminent future. The car industry is creating huge number of jobs in many places. In Germany it is a mainstay industry. In China, emotion for owning cars is still being created by mass media, as plants for building more cars are still being constructed. I have a mixed feeling for this.

Business models such as carsharing offer better economical/environmental sustainability to the society. If we look towards a further horizon, we could be braver and bolder to prepare ourselves for the structural change of the job market in the future. I may well be very wrong, but personally I do not see an extremely bright future of privately owned cars. Innovation is calling. Get ready.

Stock investing – the basics

Posted on March 4, 2014 by Asif Khan, CFA

Lesson 1: Why should someone invest in stocks?

The analysis of stocks should surely begin with the definition. Stocks represent ownership of interest in a company. If I own 10 shares of a company which has issued 500 shares in total then I own 2% of the company. That effectively means that I am entitled to 2% of the value of the company and 2% of the profit that is generated after tax.

Who should buy common stock?

Common stock (aka shares, aka equity) is an investment. Anyone with savings (Income>Expenditure) can invest in stocks with the hopes of increasing personal wealth. However, just because someone has some extra money does not mean that he should invest all of it in stocks. We will cover more of it in our “Personal Finance” section which I plan to launch after some while.

What are some alternatives to investing in stock?

Instead of stocks an investor in Bangladesh (and outside) can invest in fixed income instruments like bank deposits, government savings certificates, real estate and many other conventional and non-conventional (e.g. antiques and arts) assets. Typically, most people would hold a diversified portfolio of assets and the mix of these assets would depend on a number of factors including age, financial dependents, need for recurring income etc.

Doing our own homework

In Bangladesh most of the people do not spend time doing their own analysis or homework before investing in a stock. Therefore, they are typically speculating and going on a wild goose chase where the advanced insiders can rip them off. This stock investing series for beginners has been launched to help people avoid at least the most common pitfalls. Who knows, among my readers I could have the next Peter Lynch or Joel Greenblatt (using Warren Buffet would have been too cliché) in the making.

Skills needed to become a good investor

A good investor will actually need a large number of skills. Some basic mathematics (addition, subtraction, multiplication and division), a bit of finance, knowledge of the common financial statements, understanding of the economy will be necessary. None of these are stuff that a common person cannot learn and we will surely go over them.

On top of that there are some extra skill sets that would come in very handy like a strong network, good communication skills, knowledge of Microsoft Excel, analysis of body gestures etc. I am making it sound quite mysterious but once we are through the next lessons things will slowly come into place.

Conclusion

Investing is fun, especially when done the right way. It is like playing a computer game (think World of Warcraft or Counterstrike) and can get quite addictive. I hope these free lessons will be useful and full of fun.

Digital Revolution in Bangladesh

Posted on March 4, 2014 by Asif Khan, CFA

With great pleasure I would like to mention that WebAble has included us with some top-notch Digital Media experts in Bangladesh. We feel that it is too premature to be included with this crowd. However, it is still a great honor to be part of this team. Let us make this digital revolution happen.

Digital Revolution in Bangladesh – 23 Expert Predictions for 2014 from WebAble

Simple technical analysis of S&P 500

Posted on March 3, 2014 by Asif Khan, CFA

Yahoo Finance

I am actually a fundamental analyst by professional. However, due to my curious nature I studied a number of books on technical analysis. Part of the reason is definitely Jack D. Schwager’s immensely popular “Market Wizards” book series. I will of course have a writeup on the best technical analysis books that I read. Meanwhile, here is a small analysis on the S&P 500 using basic common sense.

There is a clear up trend which is still intact

The grey line touching the low points show that the S&P 500 is still in a mid-term uptrend. Since this is not broken we can say that the rally is still intact.

1,850 seems to act as a major resistance

In early January S&P 500 failed to cross the 1,850 level twice. Every time it reached that level there was sell pressure causing it to come down. This in technical term is called a double top (a bearish pattern).

Interestingly, after a strong down move we saw an equally strong recovery and the index is up to its resistance level of 1,850 again. This is a critical moment because if it can break through this barrier with decent volume we can expect it to move up a bit. On the other hand if it fails a third time to break this point then we do have a bit of a problem and we can consider that a triple top (more bearish than double top) has formed.

Ascending triangle pattern has formed

If we combine the up-trend line and the resistance line we see that an ascending triangle pattern has formed which is typically considered bullish. However, we can’t confirm anything until there is a breakout to the top or the bottom.

Recommendation

I would recommend doing a wait and see before taking a position. If the index breaks out to the top then a long position is justified. For people holding a position on the long side already, the daily candle patterns need to be observed closely and if the index starts retracing downwards the position can be closed or reversed (take a short).

Disclosure: I have no exposure on S&P 500 and in fact never traded it in my entire life.

Get ready for higher inflation in Bangladesh

Posted on March 2, 2014 by Asif Khan, CFA

Originally posted at Dhaka Tribune. Write up reflects authors own independent thoughts and in no way represents the firm he works for. So get ready for higher inflation in Bangladesh.

DhakaTribune

In mid January 2014, I felt that inflation would continue to remain weak in the absence of consumer confidence and low credit growth. In the light of new information and some simple grade six mathematics, I am now changing my view on inflation. To cut a long story short, I now believe that by June 2014, inflation will go very close to double digits. Without much ado, let me give my explanations.

Benefit of base year effect would reverse

From July 2013 to January 2014 MoM inflation averaged 1.1%. Despite that, YoY inflation was relatively low due to what economists commonly term “base year effect.” Because of that, going forward a small 0.6% MoM (7.2% annualized) inflation for the next 5 months would be enough to take inflation to double digits at the end of June 2014.

Min wage hike of 77% for RMG workers

The minimum wage hike by 77% for RMG workers was responsible for January 2014 MoM inflation of 1.2%. I believe that the full effect of the minimum wage hike will be visible in the February 2014 numbers. Also around 30-40% of the factories are yet to implement the wage hike, which can have another round of effects.

Energy price hike on the cards

Another variable I have not taken into consideration yet is the potential energy price hike. Media reports clearly suggest that the government is considering hiking both the energy price and the gas price which had been pending for some time. However, the timing and magnitude of both are both quite unknown at this point.

Unlikely for food prices to go lower

Since 2013, Bangladesh has had the benefit of very low food prices that helped inflation remain at reasonable levels. Unfortunately that is very bad for farmers who typically cannot cover their production costs. Thus, according to the “cobweb” theory, they will go for underproduction in the next harvest cycle. For example I heard that in certain parts of Bangladesh, 5kg of tomatoes were sold for Tk7 (9 cents). That kind of price should not be sustainable.

The chart shows where YoY inflation will end up assuming different MoM inflation rates of 0.4%, 0.6%, and 0.8%. At best, I would say it will be 0.6% MoM for the next 5 months, even though that is much lower than the last 6 months average of 1.1%.

Bangladesh Bank has also been clearly showing us, in the last two monetary policy statements, that they are afraid of inflation pressure building up. That prompted them not to reduce policy rates even though GDP growth is expected to come down this fiscal year.

What makes people happy?

Posted on February 28, 2014 by Asif Khan, CFA

Father & daughter enjoying a priceless moment at Saint Martin’s Island

NOTE: I have tried not to edit the typos, spelling mistakes and grammatical errors.

I have asked this question to a number of Bangladeshi people and got some fascinating replies. The factor that kept on repeating itself over and over again was family. It shows how important social connections mean to us.

Interestingly, almost no one mentioned wealth or money as the factor that makes them happy. However, most of the respondents would probably fall in the top-tier of the income pyramid of the country and thus wealth ‘may’ not very important from them.

So here goes the list in no particular order.

Music!!
Finding an empty seat in the local bus
When I can wrap my blanket and lie in my soft bed in the middle of chilling winter season
Sweet sound from the car exhaust and quick engine response
Thursday evening !!!
A weekend with no office phone calls or task!!!
Stargazing.
Helping people and seeing the gratitude in their eyes
Winning.
A rational conversation.
When a Bangladeshi makes a global news
My parent’s smile and my incentives makes me happy….:)
Text messages from my office during strikes/blockades, saying office would remain closed
My parent’s happiness and health 🙂
When mom exaggerates to others on something I have done and which makes her proud of me! 🙂
When a complete stranger appreciates something I have done. That is sheer happiness to me.
Honesty, positive criticism and appreciation
When my parents are happy and spending time in peace, tranquility and serenity near the ocean.
Food!!!
Helping the unfortunates and praying to ALLAH makes me happy..
Being able to prove yes I’m strong enough and be a winner …
When I do something that everyone likes and appreciates!!
Being around people I am comfortable with.
Star Wars
Success
When I see my writings get published in international journals / newspaper.
Whenever I enjoy something
Making my parents proud of me
Watching Bangladesh cricket team winning
Good food and postponed exams.
Recognition
Smile from dear ones.:)
Traveling with friends and family
Freedom
Wish transforms into reality!
Love & respect
Making a difference in the lives of others
Maintaining a simple life.
A cup of coffee a readers couch and a book that has that old rustic smells
When my surrounding people are happy…
Friday
When Kohli scores a duck, so my happy moments are pretty rare these days!
When become able to share joy with the person whom i care most.
Seeing healthy and happy dear ones!
An innocent smile of a baby
Compliments…
Making others happy.
Good relationship with (extended) family members, having friends whom I can truly depend on, exotic food, financial freedom and having an active plan to explore the whole world in this lifetime.
When got recognized for any tough work .
Smiling Face of others
Qurrata A’yun makes me happy…
Happy Parents!
Knowing that I have made my loved ones happy and proud
Every action I perform makes me happy; everything we do is in the pursuit of happiness.
Fuchka (A local delicacy)
Being the reason for someone’s smile.
Being appreciated for my unconditional help
MONEY…with this I can do/buy anything I want. I can buy happiness of others; I can also make others happy
Power, in all forms.
Appreciation, comfort, peace.
Loosing Weight
Peace
Achievements. In any form!
A holiday in the middle of a work week
Books, namaj and self-satisfaction
Acknowledgement
Everything around me! 🙂
When stock market and stock prices move congruently with my analysis
Being optimistic about future…
Food, money, love and good grades
My little sister
Haters, because they want to be what you are.
When I buy Gifts for my parents and little sister…
My daughter
Being able to help people with an absolute intention to please Allah.
A little smile on my parents’ faces!
Getting relief from any kind of tension!
Exploring something new, doing regular staffs in a different way, and getting the things I am starving for.
Making my parents proud of me ,simply spending time with my partner and the feeling that my work means something.
Achievement or Success for my hard-work!
Doing something that will get me closer to Jannat!
Making other people happy.
Good food
When my parents smile for me.
Peace
Friday and Saturday
Visiting the village once in a while
Salary
A secured life
When I can pray five time on time
Holidays
Watching the color of the sky change and know that you are free! Nothing like freedom!!!!
Money
That perfect Smile on the face of my close people
My family
Family
By making others happy :)))
Make others happy
Being in pure silence
Success
Anything that doesn’t make me unhappy…..
To provide my level best to make the world a better place
Authority blended with power, peace, money and a proper work-life balance!
Family & Friends….
A secured life!
Make parents smile
Freedom. Freedom to go where ever I want to go, do whatever i want to do.
Playing fifa
Being able to make someone smile in the worst of time makes me happy.
When my mom keep his hand on my head and say ” baba, aro boro hou ” (son be a great person)
Practical dreams/ desires that become true.
To make someone smile
Challenges
Reading a good book/ watching a good movie makes me happy!
When someone praise and tell….”well done”…

These are the things that is making others happy. What is making you happy?

Essence of Islamic Finance Part I

Posted on February 24, 2014 by Rizwan Rahman

Freedigitalphotos/pakorn

Having completed his Masters in economics, Rizwan Rahman worked at the World Bank in Bangladesh, acting as a researcher for the Senior Economist. After returning to the UK, Rizwan pursued his legal studies while concurrently working at leading law firms. In 2008, he was introduced to Islamic finance through undertaking an internship at European Finance House (now Qatar Islamic Bank). Rizwan has since worked at the Islamic Finance Council and BMB Islamic. At Edbiz Consulting, he is jointly responsible for product development, drafting of legal documentation to ensure legal and Shari’a / Shariah compliance and conducting market research and analysis. He is also senior editor for Edbiz Consulting Publications.

There are two main criticisms of the current Islamic banking and finance (IBF) industry: the first one is that given the proliferation of fiat currency, and not commodity currency, one cannot have an IBF industry in the first place. Perhaps a revolutionary idea, there is no shortage of supporters, and there have even been attempts to create a gold dirham and silver dinar as legal dinar. Mints in Dubai and Malaysia issue currency according to weight of gold and silver. The Malaysian State of Kelantan have even issued dinars and dirhams as legal tender although this is not recognized by the central government, and has limited usage.

The far more pervasive and ongoing criticism of IBF is that the products on offer resemble those offered by the conventional financial sector. Most of the products have some linkage to interest rates, and the economic substance of some products appears to replicate the economic substance of an interest based product. This discourages some people from entering the industry, regarding it a sham. For adherents, the attraction lies in the fact that Shariah scholars have rubber stamped these products, so in their minds there is some indelible connection between the Prophet’s juristic sense and the decisions passed in today’s IBF industry.

The criticism is not without merit. Exploring this further, it soon becomes clear that IBF is based upon two pillars: adherence to Islamic law as interpreted by the scholars, and the values of the conventional financial system. To explain further, an investigation into IBF’s history – and by extension global financial history – will help in our understanding of the essence of this nascent industry.

Proponents commonly say that IBF originated from the time of the Prophet. In the passing of legal opinion on contemporary IBF products, recourse to classical legal rulings is par for the course. But the link between today and yesterday is tendentious at best. The Prophet lived in far more primitive times with the economy simple and based on mercantile relationships. For that matter, the global economy at the time was archaic. This was the state of affairs until the 14th century, when we begin to see the development of a number of financial innovations including the formations of the bank.

Perhaps the most significant innovation was the Catholic Church’s acceptance of interest. Once considered a sin (although surreptitiously practiced) the Protestant theologian John Calvin declared in the 16th century that small interest charged for the disbursement of loans was acceptable. This completely revolutionized trade and the financial markets. Soon after, Goldsmiths (who used to offer security to gold deposits) in England realized that the gold they were protecting could be lent out, or rather the receipts identifying deposits of gold could be lent, and at an interest. Here we had the start of fractional reserve banking.

During this time interaction between Islamic East and Christian West was increasing. The Crusades and the conquest of Islamic Spain had created tensions between the two blocs, but trade and political relationships between Christian lands Islamic empires, particularly the Ottomans ensured relationships between the two flourished. In trade, came the exchange of ideas. Arguably, between the 7th and 13th century Islamic East was the source from which the West learned. Contemporary scholars have argued that a few substantive and procedural legal concepts were borrowed from Islamic law. We know that the Italian trade contract, the commenda, was taken from the Islamic mudaraba. However, as the West grew, Islamic East power began to wane.

By the 19th century, when the Ottoman Pasha Muhammed Ali looked favourably to the French systems, Muslim intellectual dominance had fallen dramatically. Colonialism was altering power structures and with that Muslims became observers and followers rather than producers. The East Indian Company showed the power of a multinational company, an idea completely foreign to Islamic legal thinking. This was not a state, the traditional loci of widespread power, but a coterie of people linked together to form a legal personality. The idea of a company having legal personality posed serious questions to Islamic commercial law. In Islamic law, there was no such thing and there was certainly no idea of limited liability. Islamic law considered that those investing should be responsible for covering any losses that the business incurs. For that matter, businesses in Islamic lands were small scale, one off relationships. This is not to say that capitalistic thought, free trade and profit maximization were absent from the merchants in Islamic lands, but the concepts underpinning a commercial relationship were far more simple, based on a large part on trust, and certainly not anthropomorphic.

Limited liability, legal personality and the perpetuity of the company allowed people to invest their money, comfortable in the knowledge that any investment made, would be the loss amount. With the formation of joint stock companies and the maturity of the stock markets, arms length individuals could invest creating a greater pool of income for the funding of the company. However, the entry of stock markets in the Islamic world, the first being in Istanbul in, was met with suspicion from the Shariah scholars. Such a concept was not present in Islamic legal thinking.

The final days of the Ottoman Empire was marked by reforms characterized by the desire to incorporate Western laws, and financial systems without divesting Islamic ideas. Unfortunately, the dominance of Western ideas was too great. For one thing, through colonialism, through increased GDP, through increased affluence, the West was evolving into prosperity. The Islamic East was suffering. Hence, it was natural for many secular people to look to the West as the fount for success, and regard Islamic laws as hampering development and progress. In what followed was the creation of two groupings: the Muslims looking at the secular West as the wellspring for ideas and innovations, and those Muslims who feared that their religion was being diluted by encroachment of Western (liberal) ideas. The antagonism played itself out in social space, the political space and the financial space. It became far more controversial in the 20th century.

Improvement of our Financial Digital Assets

Posted on February 24, 2014 by Guest

Omar Sharif was the lead digital Creative Director at CNN/Sports Illustrated in NY. Currently he leads his own boutique digital User Experience agency called Congregation, Digital Simply. To learn more, go to their website. You can follow him on as well.

Note: The views shared here belongs to the author.

As a Bangladeshi-American, with experience in design (how information should be displayed clearly) I would like to take a stance on how we can get attention of our financial institutions to give us a better financial digital assets to interact with. Since websites are no longer just something one views from a desktop, and its something that is gaining more and more importance with the increase in mobile internet users, any institution should see their digital presentation as an asset.

Before picking out institutions whom I will use as examples (and there are many at fault) first we need to understand what design is. It is definitely not a Western made marketing gimmick but real science (not just social and psychology) and but science of the brain.

If you receive a piece of paper from your professor or a handout at a corporate meeting, and you are told to read through, we have to assume that we are not at an English literature class. The information has to have a hierarchy, What is the most important item, the second most important item(s) the third so on and so on. If everything looks to be the same size, have the same color, and things are packed into one page, I guarantee you will be confused. It will be hard for you to pay attention to what is important and what is lesser important than that.

The regulatory bodies in Bangladesh are a big sufferer of this problem. There is so much text, it’s as if we are reading a bulletin board. It packs in as much text as possible as if somehow if you don’t hit people with everything at once, they will not stick around the website. In reality it’s just the opposite. Simplicity is the key and we need to take the user’s attention to the most relevant places. Some features also need to be responsive (needs to adapt to a mobile/tab screen) but here in Bangladesh the designs are completely static. If the texts become microscopic while viewing from a cell phone then the website is missing out a critical mass of users.

Now in the private sector, at a certain banks website, all the vertical links below each section “Corporate Banking”, “Retail Banking”, “SME Banking” etc are tiny. Most Bangladeshi users are on a tablet or mobile phone. How are they supposed to tap those links with their fingers? This problem is quite rampant across all the bank websites.

And what is up with every digital space using scrolling text? It’s the text that goes from one direction to other, that’s used for “Breaking News” on media sites. One can simply create a section for News and that solves it. Most students on their first year in design school use this scrolling technique. Our mature institutions have to go past that.

To put everything into perspective, what I am talking about here is UX design (User Experience Design). It’s where a person with a background in graphic design and technology work with company management and web programmers to come up with the architecture of their digital asset. More importantly, they decide how other human beings will use the digital asset and make sure the experience is simple and comfortable. In developed countries companies spend millions in this field, because they understand at the end of the day, putting people first is the best financial bet.

Our culture has history of knowing how to treat guests. Just because someone comes to your digital space, doesn’t mean they stop being a human being. They are also looking for comfort in getting the information they need and moving on. I hope institutions will pay attention to this, and treat people as guests. Even at some village homes, there are still a separate living quarter for strangers who may come at night to seek shelter and comfort. We need to expand this culture of hospitality everywhere including digital space.

Basics of stock investing – Introduction

Posted on February 21, 2014 by Asif Khan, CFA

I was planning to write a series on Stock investing for a long time but was unable to make the time for it. Now is a good time to start the series as the blog is getting a decent amount of viewers. I plan to mainly write in very simple terms so that the absolute layman can also understand what I am writing. However, I do feel that even some experienced professional’s can get some different perspective by reading this series because investing at the end of the day is an art.

I will be writing the content and will also give reference books, articles, videos etc. At times I might also upload excel files to properly prove the theory with practical examples.

I really hope that this attempt will make a small contribution in making the Bangladesh capital market less speculative and rumor based. The retail investor had played the ‘bigger fool’ game for too long and are ending up losing everything. Until and unless they understand that they need to make their own investment decisions themselves or find out true professionals with accountability to manage their assets they will continue to lose.

Since this is my first attempt at something like this there could be mistakes and editing involved. So please forgive me in advance for such errors as I have a full-time job and can only work on my blog on my spare time.

Photocredits: Freedigitalphotos/Photokanok

The best books on stock investing

Posted on February 20, 2014 by Asif Khan, CFA

I read a lot and am highly passionate about the subject of stock investing. The following are the books that I consider a must read for almost all stock market ‘investors’ . Here I will give a short summary to each of these books. However I do plan on having detailed reviews on each of them later on.

1. The Little Book That Still Beats The Market by Joel Greenblatt

I usually recommend this book to anyone who wants to learn stock investing. However, I strongly believe that both new and old investors will benefit from the wisdom shared in the book. Greenblatt explains the logic and the irrationality of the markets using such a simple language that even a school going kid should be able to understand it.

2. Beating The Street by Peter Lynch

The celebrated Peter Lynch of the Fidelity Magellan fund demonstrates how a basic layman using common sense can actually beat the experts from Wall Street. Just like most other books I like it is written in very simple and easy to understand language. I plan on reading this book again very soon. Usually this is the second book I recommend to people.

3. The Little Book That Builds Wealth by Pat Dorsey

This is the type of book that I fall in love with. Easy to read, small and has a world of information. Don’t be fooled by the gimmicky title of the book as I rate it within the 3 best books on investing I ever read. The book explains the concept of sustainable competitive advantage (aka economic moat) that brings superior returns

4. The Little Book of Value Investing by Christopher H. Browne

Another brilliant book on value investing from the little book, big profits series. Explains the concept of value investing crisply. A great book by a great investor.

5. Market Wizard Series by Jack D. Schwager

There are four books in this series. Each of them are filled with interviews with some of the best traders and investors. From Ray Dalio to Joel Greenblatt to Paul Tudor Jones, Mr Schwager has interviewed them all. And these are not the typical interviews that we read. Each of them have very insightful and deep questions and answers.

6. Common Stocks and Uncommon Profits by Philip A. Fisher

Phil Fisher can be considered as one of the gurus of fundamental investing. Many great investors in the world have mentioned him as an influence. His strategy of a holistic approach to fundamental due diligence by not only looking at a company but also studying the suppliers, customers and competitors has become the gold standard in the equity analysis world.

7. You Can Be a Stock Market Genius by Joel Greenblatt

The ultimate guide to special situation (mergers, acquisitions, spin-offs, divestitures) investing. Greenblatt outdoes himself with this book and proves clearly that the efficient market hypothesis is a myth even in the highly developed markets. Special situations very often lead to irrationality in valuation and these can be exploited by the clever investor.

8. The Essays of Warren Buffet by Warren Buffet

This is a compilation of the letters Warren Buffet wrote to his shareholders. The letters have been organized according to category. The reader will clearly understand why this man is one of the richest people in the world.

9. Best practices for Equity Research Analysts by James Valentine

Hands down the best book on equity research. Short, compact and highly practical guide for both buy and sell side analysts. A must read for all investors in my opinion. It might be a bit hard to apply in real life but the book title clearly mentions that these are the ‘best practices’.

10. Margin of safety by Seth A. Klarman

Another excellent book on value investing. The author shows with theory, logic and practical examples why investment fads are pretty much always bogus. The best way to make money is to have a strong disciplined fundamental analysis approach.