Exchange Traded Funds (ETF)

I have been a reading a lot of good stories about Exchange Traded Funds (ETF's) and have been trying to understand more about this instrument. There are a lot of explanations available on the web but here is a simple one - An ETF is a basket of stocks that is traded like any other stock in the market. The basket could be defined by a sector or sub-sector. So, how is ETF different from an index fund? Index funds track an index but getting in and out is not easy. Index fund units are bought and redeemed from a mutual fund company and not on the open market whereas EFT can be traded just like a regular stock. ETF can give me the diversification and flexibility but how do I know which EFT to buy. Do I just go by the past performance? What kind of research goes into forming and evaluating an ETF? Well, forming part is easy - define a bucket and someone like Barclay's would do that for you. Doing the research is still an involved process - Is ETF tracking the Energy sector a good buy?There is a lot more to learn about ETF's. One more small project. It never ends :-)

Order of letters in a word

I found this amusing:

Aoccdrnig to a rscheearch at an Elingsh uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoetnt tihng is taht frist and lsat ltteer is at the rghit pclae. The rset can be a toatl mses and you can sitll raed it wouthit porbelm. Tihs is bcuseae we do not raed ervey lteter by itslef but the wrod as a wlohe.

Reverse Offshoring

Our graphic design consultant in India, who runs a 3 people shop, recently "offshored" some work to Germany. What was interesting was that he found it cheaper and better to get the work done by the german engineer, whom he paid $35 for the project as opposed to $120 quoted by an indian engineer. How is possible for the german guy to outbid the indian guy? Well, there could be many reasons and I am not going to guess. But the process intrigued me. Our man posted his requirements on many discussion forums. The german engineer emailed his quote and sample work and got the order. Once the project was completed the german engineer got paid using PayPal. Internet has not only created huge opportunities in the developing world but also helped in bringing people together, socially and economically.

Real Estate in India

Do we have a bubble situation here? I don't know about other cities in India, but real estate investments in Bangalore have returned more that 50% in the last 2-3 years. Some would argue that it is close to 100% . I don't know. Really don't. Few of my friends are contemplating investing. I am not so sure. But sounds very rosy and exuberant. One variable I have not yet researched is the interest rates - I think they are quite low. I have to verify the data. What will happen when the interest rates start rising? Would this reduce the demand and thus prices? Are there too many people (read NRI's) just "investing" and thus creating an artificial demand? Only time will tell if the exuberance is irrational or not.

Real estate consulting firm CB Richard Ellis conducted a survey to determine global market rents. The survey has ranked Mumbai as the world's 15th most expensive place, Manhattan, the 20th, while Delhi stands at the 32nd position. CBRE's office space in Mumbai is more expensive than Manhattan. Interesting!!