Like Ivy on a brick-Wall

Yesterday, I saw a willow tree,
Happy under the diamond-lit sky.
It was all by itself, humming,
Humming a song I had long forgotten,
And I remembered you.
I remembered you as you were,
When you came charging,
Charging on a chariot of fire
Against my defenseless shoreline.

You conquered my country,
You demolished my freedom.

Just as suddenly as you came,
Without giving a second thought,
Without giving another look,
On the first signal, you left,
You left my impoverished country,
Impoverished by your absence.
From time to time, I wonder,
As I am wondering now,
Where you are and
Where you would be.
Perhaps, you are busy,
Busy raising stone butterflies,
Or reading lost letters of history.

As I walk these abandoned streets,
Streets abandoned by Sunday afternoon,
I remember watching you,
Watching you what you do to your movement,
Your feminine movement of the Pacific gracefulness
And Mediterranean brilliance.
But, I , most of all,
Remember wanting to do to you,
What Ivy does to the brick-wall.

Is that You, O Lord?

Someone beside me,
Someone in my mind,
Someone entangled,
A face among
Uncollected thoughts.
I can not see you with clarity.
Memory: a river that returns to gather
What it left behind.
Memory is a mirror of remembrance.
On the other side of remembrance is forgetfulness.
In forgetfulness, we remember,
The shadows passing -
Lovers, strangers, friends and foes, life
And death.
I can not say I remember you.
And I can not say I do not.
Between remembering and forgetting,
My thoughts are like a multitude of sunflowers,
Detached from the stem, suspended in the vast sky,
Looking for a sun of umbra and penumbra.
In my infinite recollections,You stand,
Opaque, transparent, very much human, full of irony.

In this field of uncollected remembrances,
Through all these layers of shadows,
I can not see with clarity,
But is it really You,
O Lord?

Revisiting the Balance Sheet Analysis

In the previous blog titled “So, We Ask”, it was mentioned that a good management team of a company on the right side of the business should be able to increase market value of its company by an amount equal to or more than the retained earnings. Another way to arrive at the same outcome is to look at the “net cash” position of a company. Roughly, net cash is obtained by subtracting the long-term debts from the sum of cash, cash equivalents and other marketable securities. Next thing to do is to divide net cash with the number of outstanding shares. This would give how much net cash is available per share. So, if you bought a stock at X dollar when the net cash was Y dollars per share, it would not be unreasonable to expect the share value to appreciate to an amount close to X+Y.

P/E Ratio

This expression combines two important company variables. This establishes a relationship between stock price and earning for the past twelve months. This ratio is normalized value for per unit earning. In other words, it tells us, for every dollar earned, how much the market is paying for one of its shares. Therefore, if one is considering investing in a company, an examination of its historical P/E values would readily indicate if the current price is more or less than what others have paid for the shares of the said company in the past. P/E also reflects investor perception of the future earning potential. During periods of economic boom, general P/E ratios tend to be high. And the reverse is true when economy does poorly. Fast growers tend to have high P/E ratios as compared to mature companies which tend to grow at slower rate. While looking at multiples, it is good to keep things in perspective. There is no hard and fast rule that says that a particular company ought to have a certain multiple. If there is, then is it two, five, twelve or what? Here, I have not seen any compelling argument to convince me with a number. Therefore, I think it is a good idea to compare a specific P/E ratio with industry standard. If the number is too high, then it would be safer to touch the face of a Royal Bengal tiger than to invest in it. The stock price is bound to come down sooner or later. P/E ratio can also be viewed as number of years a company will take in earning an initial investment, assuming that it will maintain the current rate of earning. Stock price (P) is very strongly influenced by fluctuations in earning (E). One does not change without changing the other. I would consider it a great investment opportunity, if I came across a company having a low P/E multiple while its earning-growth is red hot. Sooner or later, its P/E is bound to catch up. One can say that a company is fairly priced if P/E is more or less equal to its rate of earning growth. If the P/E is less than the growth rate of earning, it is a bargain!

Inseparable Under Mesopotamian Sky

Under the blue Mesopotamian sky
There is a land where barefooted raindrops
Dance on the bloodstained leaves of grass.
Some call it homeland.
For others,
It is a battlefield
Where ravens of war devour the expanse of the sky
Where every lintel is marked with blood of impossible peace
Where stray dogs greet dwellers in the morning
And vultures feed on their lifeless bodies in the evening.
How did we, after having traveled so far, after having learned so much,
Arrive in a nightmare such as this?
Where can one find that neglected hope?
Will God raise wise children of Abraham
From the exploded remains of conscience?

It is true that we have fought bitterly as foes.
But let us not forget, we have also lived together long
In this parenthesized geography.
It is time we realize,
How inseparable we have become
Under the blue and beautiful Mesopotamian sky!

Something Beautiful

I want to share a poem titled “Where the Mind is Without Fear” with those who enter the blog world. It is a poem written by Rabindranath Tagore who lived and died in pre-independent India. You would find that this poem tends to leave its footprints in the mind of those who read it.

Where The Mind is Without Fear
WHERE the mind is without fear and the head is held high
Where knowledge is free
Where the world has not been broken up into fragments
By narrow domestic walls
Where words come out from the depth of truth
Where tireless striving stretches its arms towards perfection
Where the clear stream of reason has not lost its way
Into the dreary desert sand of dead habit
Where the mind is led forward by thee
Into ever-widening thought and action
Into that heaven of freedom, my Father, let my country awake.
Rabindranath Tagore

I am dreaming

You invade my thoughts
With your eyes closed.
I visit you with bouquets of dream.

Your eyes illuminate my dreams!
And your face decorates my thoughts!
Together
We arrange and rearrange the stars
Into constellations
In the sky of my imagination.

Your shadow would, so often, fall on my dreams
And become a flower in my hand.
And your name,
A love poem that I recite in my dream.

Only in dreams, this is possible,
And only in dreams, you are real.
My beloved, reality is a circle inverted many times!
And inside this circle, I am.
And the circle has its center
On the other side of the horizon.

It is all about performance

One may not always be able to control what one earns, but one can definitely do something about what one spends. This can make a great deal of difference both in corporate and personal financial health. A company which judiciously practices cost-cutting without hampering the productivity is the company that can deliver strong financial results. As many of us have seen while reading annual reports of various corporations, some companies seem to bring in revenues from sales that increase year after year and yet the net profit margin remains stuck at the bottom of the chart without showing much sign of gathering any steam anytime soon. That is depressing. While others operating in the same sector seem to produce much better net profit margin from a comparable levels of sales. To arrive at the net profit margin figure, several deductions have to be made from sales. They are: cost of goods sold, administrative expenses, marketing costs, taxes etc. Therefore, a management team that promotes and integrates company-wide cost-cutting efforts into the psyche of its company is a team that would go far. Net profit margin is simply obtained by expressing the earning after tax as a percentage of sales. Return on invested capital and return on equity are also important performance measures. All these ratios and numbers are readily available in any of these financial websites. Therefore, it would be worthwhile to look at these numbers and see where they would fit in the scheme of things. When investment analysis enters meditative phase, you begin to see all the parts assembled into one whole structure – a company represented by pure numbers.

Is money the root of all evils today? Do you agree?

Interests and Dividends

There are those who like the periodicity and predictability of interest and dividend income. Financing philosophy varies from company to company. Some like to use debt as a leveraging tool. I personally do not like debt of any kind. They say debts are good during good economic times, because, they accentuate returns. Debts magnify losses during bad years too. However, anybody considering investing in corporate debt issues purely because of the attractive yields and expected constancy in payment, one would do well to consider whether the earnings are large enough to back the interest payments of all the debts (Bank loans, short- and long-term and any other cookie jar of loans the company has put its hand into). This information can be simply obtained by dividing the Earning before Interests and Taxes (EBIT) by total annual interests payable. A ratio of three or higher together with a good past records, say five years, of continuous interest payment is considered good investment candidate. However, there are exceptions one may make from time to time. For example, there are companies which are able to pay interests and continue to do so without ever meeting the theoretically determined margin of safety. One could invest in the debt issues of such companies and still expect the predictability offered by companies with iron-clad finance. Also, most companies try hard not to default on the interest and preferred dividend payments. They would rather hang by the skin of their teeth than default. Unlike interest, preferred dividend distribution, on the other hand, is made after taxes have been paid. Therefore, when calculating adequacy of dividend coverage, it is grossed up to its pre-tax value. Tax rate can be calculated from the company income statement. The grossed up dividend is then added to total interests payable. This value is then used to divide EBIT. The ratios so obtained from past five or more years can be plotted and see if the trend is improving or declining. Records of interest and dividend coverage can be made more meaningful when examined in the light of company fundamentals. If the company fundamentals are expected to remain comparable to or improve upon those of interest and dividend paying years, then one can assume with high degree of confidence that interest and dividend payment would continue.

Some feel that life is a terminal disease. Do you disagree?