At the India Equity show there were many speakers. One of the good speakers was Mr. Nilesh Shah, CIO, and Deputy Managing Director of Icici Prudential asset management company. He of course is a good speaker from the understanding point of view – his examples are always related to food though :). When he talks of inflation, he talks of the price of masala dosa, when he talks of a asset allocation he talks of a “thali” for a balanced diet, and true to form this time he spoke of how mutual funds are like Udupi hotel! Surely he likes his food – but his body does not show it. Lucky him!

This is what he had to say at the India Equity Show, 7th June, 2008 at Worli Mumbai:

He gave a nice, new version of the ant and the grasshopper story. As is known this is a old story about thrift. The ant toils in summer and creates a warehouse for itself for the winter. However, the grasshopper which has been playing all summer has no larder from which to eat. When the grasshopper asks the ant for food, the ant tells the grasshopper if you have sang all summer, you should now go and dance!

Nilesh’s take was “people like us” – I guess he meant the middle class, educated Indians do not vote and therefore we get the politicians we deserve. However, he ended on an optimistic note. He said if politicians are in a performing mode, they will get re-elected (like Gujarat and now Bihar), otherwise they will get thrown out.

His version of the ant and the grasshopper story is:

Once upon a time there was an ant and a grasshopper….However in the winter when the grasshopper did not have any food, the situation changed.

There was a round-table discussion on cnbc, zee, bbc and cnn on how to save the grasshopper. 4 activist groups had gathered data on how ants had more food to eat and that it could get spoilt. Soon there were dharnas and protests held all over the country. Kerala, West Bengal, Tripura announced a state wide bandh protesting against the ants keeping all the food to themselves – so what if they had earned it themselves. Under pressure from UP, Kerala, and some more votes in the West of the country an ordinance was pushed through : “Prevention of terrorism against grasshoppers”.

This was followed by IT raids which took all the food and gave it to many people hoping it would reach the grasshoppers. End of story.

Nilesh then went on to talk about “rahu” and “ketu”. Now he felt that it is rahu kalam because of oil prices. He felt that if oil prices are not brought down, the market is headed down. He felt that higher oil prices would lead to inflation, would lead to higher interest rates, and thus a higher deficit. We will all end up paying for the quality of politicians we vote for (or as he says do not vote for).

Unlike the earlier oil spike we will not pledge our gold, but clearly our momentum of at least one year is lost. He felt that politicians will ensure a de-rating of India story. He had something sinister to say about the Index being in 4 digits if oil hits $ 200.

So go out and invest….!