The Hindu Business Line : Safe havens

“Back in 2001, the ancient metal of kings was selling for just over $300 an ounce. In October 2008, the price was a nifty $900 an ounce – thanks, in part, to the disintegrating stock market.”

After a seven-year run-up during

which its value tripled, is gold ready

to top out, too, the author

asks rhetorically, and proceeds to answer, that it is hard to say.

To some, he reasons, gold’s bull might still look young because global demand for the product – jewellery manufacturers, for instance – has outstripped supply. “But now that the world economy is hurting (thanks to the US’ mortgage crisis), demand could fall, sending gold down again,” foresees Muolo, in a chapter titled ‘where to put your money now.’ The so-called sin or vice stocks can be a safe haven during tough times, he recommends.

“This would include companies that are involved in the manufacture of such things as alcohol, tobacco, and entertainment (movies, video games, DVDs).”

The day’s news seems to vouch for this observation.

“Bollywood is on a high without recession causing any effect. After Aamir Khans Ghajini has collected Rs 235 crore, Hrithik Roshan’s upcoming film Kites produced by Rakesh Roshan and directed by Anurag Basu has been bought by Reliance Big Pictures for a whopping Rs 150 crore which makes it the biggest deal in Bollywood,” opens Rohit Khilnani in a story dated February 7,

in http://ibnlive.in.com.

Muolo informs that during the Great Depression, the movie business in the US thrived. “Back then matinees cost five cents and you got to see two shows. This time around it’s $9.”

Compelling study of what the emergency economic measures mean to our money, mortgages and taxes.
Good accountants

The stereotypical accountant may be shy, retiring, and slow to anger, but once aroused, there is no greater ally, say Catherine and Joe Stenzel in CFO Survival Guide: Plotting the Course to Financial Leadership ( www.landmarkonthenet.com ). “Accountants are engineers at heart. They want to know how things work, and when things are not working, why they are not,” the authors add.

“Accountants want to build visible structures to exhibit how and why things perform or not. At heart, they are uncomfortable with mysteries, and they have excellent intuitions to ferret out secrets others do not want told. Good accountants keep things grounded and real when marketing talks blue sky or the CEO has a flight of fantasy.”

In contrast, corporations operate largely outside human law and morality, bemoan the Stenzels. They, however, envision that only good CFOs within corporations and other large institutions can provide moral leadership to balance the sheer power and size the powerful organisations possess.

“Banded together within industries, geography, and professional affiliations, these chief accountants can stop the financial shell games; call to task those who act out of fear, greed, or ego-arrogance; and begin to assure longevity and health for their workplaces. Accountants are the ones who can create professional self-redemption.”

Quite reassuringly, the authors aver that one CFO at a time, and small groups of accountants together, “can flap butterfly wings in the current corporate chaos and raise up a righteous storm to clear the air.”

Refreshing read.
Inequality inquiry

Historical legacies of nations play a major role in their income inequality levels, finds Sanjoy Chakravorty in Fragments of Inequality: Social, Spatial, and Evolutionary Analyses of Income Distribution ( www.taylorandfrancis.com ). Wherever there has been slavery, or colonisation, we can see that social inequality between races and ethnic groups is a serious issue, he adds.

“The worst situations are those where there have been both slavery and colonisation.”

The weaker groups (descendants of slaves and colonised peoples) continue to have less capital, less education, less land, less opportunity, less voice, less influence, less income, notes Chakravorty.

“Though, in many countries, developed and developing, these inequalities have declined over the last half century – for instance, racial inequalities have declined in the US, Brazil, and South Africa, caste inequalities have declined in India, and ethnic inequalities have declined in Malaysia – the inequality levels continue to be either quite high (as in Brazil) or very high (as in South Africa).”
Right pick for the research-minded.
Check your gearing
An important concept in corporate financing is that of capital gearing, or leverage, writes F. A. J. Couldery in The Manager’s Handbook for Understanding Accounts ( www.infinitybooks.org). Gearing, for starters, is the relationship between the borrowed funds on which interest is paid, and the proprietors’ capital on which dividends are paid.
The author explains, through examples, how high-geared companies that do well when fortune favours them can be in severe difficulties in a bad year. Companies that borrowed heavily in boom times can be the first ones to collapse when recession strikes, he cautions.
There is, however, no right or wrong amount of gearing for a business, Couldery writes. “Just as there are optimists and pessimists, so some businessmen are happy to work with a lot of borrowed money whilst others shudder at the thought.”
Beginner material of relevance to the manager on the job.

BookPeek.blogspot.com
D. Murali

More Stories on : Books | Book Value

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page