One slow afternoon, Bertie’s winsome private banker Natasha called. Ever since he read ‘Where are the customers’ yachts?’, Bertie avoids private bankers. But his curious disposition made him want to hear about the latest fad that the Rolexes were peddling. “Hey Bert” Natasha lilted. “Long time na!” Bertie mumbled something about being busy. “Poor boy! You work so hard. But you know what, we can make your money work harder.” Natasha went on “We just launched a Structured Product exclusively for our top clients.” She paused for effect. “This is how it works. You agree to pledge a part of your mutual fund portfolio that’s already with us. We invest the money in a Nifty-linked structured product that assures you a 12% return. You don’t have to do anything. Free money. No brainer, na?”
Bertie remembered a line from ‘customers’ yachts’; “What’s in it for you?”. He lobbed it at Natasha. “Nothing Bert, nothing at all. A happy client is the only reward.” Bertie smirked. “How about we do this with fresh money? he asked “Forget all this pledging business. Give me an assured 12% on new investment.” Bertie could hear Natasha muting the line; possibly conferring with her boss. She came back on the phone quickly. “That we can’t do Bertie. But think about this offer, na. It’s only for a limited time.” Bertie knew that the juicy part of the transaction was the interest his private banker was going to earn on the loan against his mutual fund. Even if all went to plan, his net return from the structured product would be a few basis points while Natasha bronzed herself on her yacht.
Tech woes
Bertie’s long book is doing well except his tech services holdings and of course one mega bank, whose presence in the portfolio, a jaded Bertie does not even want to acknowledge. But coming back to tech services, Bertie has been scratching his head about their limp business performance. Over many years, Bertie had been conditioned to think that a strong US economy meant ample business for our tech companies but for the last couple of years that correlation had not worked.
He posed the question to his favourite tech services analyst and the bearded gentleman took a considered pause. “Lot of money is going into AI and new software, Bertie. But unlike earlier, these are now billed as services – like a utility bill. Think of Amazon sending a monthly invoice for hosting your data on its servers.” he said. “Which means you don’t really have a say when prices are hiked and neither can you defer investment in these areas as you earlier could.” Bertie was furiously making notes to regurgitate at the next investment committee meeting.
“That leaves the traditional IT services spending as a residual tech spend. One that CIOs can squeeze to balance their budgets. That’s probably what is going on,’ he concluded. Whether this is a genuine insight or just an elegant-sounding theory back-fitted to explain facts, only time will tell. Bertie, in the meanwhile, is no wiser about what to do with his tech services holdings but is confident of impressing the investment committee.
Robotic glitch
The bar at Bertie’s Fat Cats Club is infested by too many, well, fat cats. After a game of his favourite racquet sport, Bertie occasionally stops by for a sundowner but rarely mixes with the braggarts. He hears the conversations though to suss out what this group of Rolexes is up to. Tales of exotic vacations, concert tickets and private lunches with cricketers are now passe. One captain of the industry was bragging about how a robot performed his knee replacement at a prestigious private hospital.
Now Bertie has no use for spiritual gurus, divorce lawyers or robot surgeons but the man likes to remain in the know about what the Rolexes are bragging about. A quick call to the medical establishment in question revealed that the gentleman had indeed paid thrice the rack rate for the services of a robot. What’s worse, despite the higher fees, the hospital barely made any money from the procedure as the use of a robot escalated all other attendant costs. Add to that, the fact that they had two flesh-and-blood orthopaedic surgeons standing by for emergencies. Bertie sensed that the investor excitement about automation hadn’t rubbed off on the hospitals. He is happy though that the bar at Fat Cats may remain crowded, but the squash courts will be empty.
(Bertie is a Mumbai-based fund manager whose compliance department wishes him to cough twice before speaking and then decide not to say it after all.)