Sunday, February 15, 2009

Diksha session @ SJMSOM

So another weekend just flew by!!!! Tata weekend!!!
Just back to the room after collecting few materials for my Marketing project, its about Apollo tyres and currently, rudderless, inspite of the most energetic starts. On my way out i was wondering that some how the number of things you need to carry while moving out seems to be increasing.
Earlier it was just the little watch that Dad gifted for birthday, then came the wallet and gush of pride with it... Much later, of course, arrived the cell phone and now, whenever I move out of the room I carry a pendrive along with me, for some unforeseen data exchange. Of course, the tech-savvy will argue that a capable cell phone will make the pendrive redundant but currently such analysis is beyond my (and many others... with the crisis around) financial condition.
Another latest of latest developments has been my new-found love for Lynyrd Skynyrd, which makes them permanent fixtures on my playlist for the next week atleast. Ofcourse, the songs have been generously mixed with Delhi6 and DevD songs.
Saturday morning isn't the best time for any kind of industry interaction, let alone financial but then some people really do make us sit up and listen. So was the case this weekend when Mr A.V.Rajwade, visiting faculty at IIM A and SPJIMR and a practitioner in the financial services industry for more than 50 years, dropped by (for lack of better words) for a tete-a-tete with us. He talked about the existing financial crisis and brought out certain new perspectives to the issue, even though I thought there was nothing much left to discuss about the issue.
He started of discussing the various economic philosophies, right from Adam Smith to Keynes through Marx, and walked us through the socio-political transformations associated with the rise and fall of each of these beliefs. There was also a brief discussion on laissez faire capitalism and emergence of state responsibility in purely capitalist economies.
Thereafter the discussion moved to the banking business and I guess, the whole industry was summed up succintly when he said that it has moved from "lend and wait for repayment" to "originate and sell" model. He went on to explain certain aspects of the industry, especially risk-reward asymmetry and the disadvantages of complex of financial instruments. He attributed the current crisis to the willingness of most investors to invest in risky assets, even though they couldn't make much sense of the products that were being offered to them. He also initiated a brief discussion on various credit derivatives and their complexities.
Finally, and probably most importantly, he touched upon the things that a budding finance manager should learn from the crisis. To summarise in three points:
1. understand the risk/return compromise
2. Models are no substitute for common sense
3. Financial services are only slaves to the real economy and cannot be its master.

I also asked him whether he thinks this is the end of laissez faire capitalism to which he agreed. I, however, do not concur with his view. But more of that later need to publish this before the LAN stops working.

And yeah... I gotta know that I stood 4th in the PG cult elocution competition... Kudos to Vishesh for getting that info... he he he!!!

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