Ralph Nader said about General Motors long ago.

I am saying this about the Indian Equity markets, now. The problem with investors, wannabe investors, scared of the market investors…is they keep learning, but most of the times the learn the wrong lessons.

‘I have made money on ESOPs’: Well if you had Esops of Indiainfoline, Edelweiss, etc. you may not have made much money. Largely investing earns you money if you were lucky (smart) to have been investing in 1989, 90, 2001, 2002-5, 2008…you would have made money.

Let us take the case of Indiainfoline. It has a book value of Rs. 38 and a market price of 46. It is available at a dividend yield of 6.5% (very close to the gilt yield, and this is an equity share dammit!).

This share has seen a high of 385 and a low of 34. Yes I know standard deviation and variance in an equity share is not to be scoffed at…

June 3rd somebody called me and said…’Rs. 385 was the high, how much can I lose buying at 46′. The honest answer? I do not know.

Broking is not a high margin business. It has to be done diligently and with very low overheads. The big brokerage firms never got back the volumes that they got in 2009. The BSE membership which was once like a ‘millionaire card’ is now available for Rs. 10 lakhs. I have seen 4-5 people get together and ‘buy’ a card just to save brokerage. This not just in the financial capital but even in smaller cities like Jaipur, Ahmedabad, etc.

What is attractive is businesses like lending money against shares, lending for gold, lending to traders (who lose!),…and if this is so, one needs to look at balance sheets the way you look at a bank.