Putting short term money into illiquid asset land, infra, real estate created this current issue as cheap money that came in financial system post demon which was deployed in fake AAA rated assets. Once the music stopped - everyone was in trouble. Companies that manage to increase its deby repayments mostly survive the crisis. One with immediate debt maturity usually struggle.
Solution for current economic slowdown - 1) Need to flood market with significant liquidity. Need to deploy steroids in key sectors such as auto. First time seeing 2w, cars and commercial vehicle going down. 2) fix real estate sector - There is no logic for commercial office space to yield 8% and residential 2%. There should be significant correction in residential real estate prices to bring equilibrium or atleast 4-5% yield.
Indian businesses - there is a risk of unknown unknown where audited balance sheet may not show the true picture.
On Institutional investors - enforcement of shareholder rights is important. Would love to see more hostile takeovers where investors vote on their feet. Activist shareholder's time has come. Fund managers should be independent.
Nuggets of wisdom on career - 1) enjoy what you do. There should be passion in what you do. This is the most important thing. 2) if something is too good to be true then dont do it 3) follow conviction - its better to be stupid now than sorry later.
Need 3 human qualities in financial sector. 1) prudence - no excessive leverage, dont go bust as you build 2) simplicity - avoid complex products - if u dont understand any product please dont sell it to your customers 3) humility - financial service is not the centre of the universe - be humble.
Time management - keep urself clutterless so that u can do what is important. Leaders should delegate authority while keeping full accountability.
(Uday Kotak spoke at CFA Institute India Wealth management conference)
By: via @AlliesFin Serve T.ME/ALLiESFiN
