Chinese companies are dumping, but we will match prices: BHEL

NEW DELHI: Market leader BHEL has accused the Chinese companies of grabbing the equipment supply contract for mega power projects by resorting to dumping, but the state-owned undertaking declined to move government on this.

"Chinese currency yuan is under-valued. There is a case of dumping," BHEL CMD K Ravi Kumar told reporters when asked as to why his corporation lost out on contracts for the two Ultra Mega Power Projects to Chinese companies.

He, however, said that "I dont want to take up (the issue) in a very aggressive way. I will consider... We need not go and fight with the Chinese. We don't want 100 per cent of the market share. With 60 per cent of the share and having enough profits, it should be okay with us."

At the same time, he said, in terms of performance, BHEL equipment were much better than the competitors and referred to independent studies to establish that the plant load factor of its projects was 90 per cent, while it was 60 per cent in the case of Chinese equipment.

Claiming that BHEL was fully geared up for any competition from the neighbouring country, Ravi Kumar said there was a price difference of up to 20 per cent and the Chiense valuation was also not as per international competition.

"Today, we have matched almost the Chienese price... We are very competitive with the competition," he said, adding that BHEL had an advantage of giving a complete solution for any project as against the product leaders like Siemens and GE and cost leaders like Chienese companies.

Citigroup's 2008 losses equals that of all Indian banks

MUMBAI/NEW YORK: It's probably the price of being the largest that in the ongoing slump across global bourses, the market value lost by the world's biggest bank Citigroup, run by India-born Vikram Pandit, so far in 2008 is equal to the loss suffered by all the Indian banks together.

But, despite this huge loss of close to 43 billion dollars, the US banking is still valued more than all the Indian banks taken together.

The market capitalisation of Citigroup has dropped by 26.63 per cent since the beginning of the current calendar year, making it the worst performer among the top 30 blue-chips in the US that constitute the benchmark Dow Jones Industrial Average (DJIA) index in the American equity market.

The percentage loss in Citigroup's market cap is lower than that of Bombay Stock Exchange's banking sector index Bankex as well as a number of Indian banks in the same period. However, owing to the larger market value of the US banking giant, the absolute loss is equivalent to the collective loss sufferred by all the 18 banks present on the BSE Bankex index.

Citigroup, which has been among the worst affected from the US subprime crisis, has seen its market value getting eroded by close to 43 billion dollars since the beginning of the current year. A similar loss has been recorded by the 18 Indian banks during the same period.

While Citigroup's market value has dropped from about 161 billion dollars at the end of 2007 to 118 billion dollars at present, that of the 18 Bankex companies has dropped from about Rs 5,35,960 crore (136 billion dollars) to close to Rs 3,64,522 crore.

Market slide: Strategy an investor should adopt

The Bombay Stock Exchange (BSE) Sensex and National Stock Exchange (NSE) Nifty reached their all-time highs of 21,206 and 6,357, respectively, in January 2008. But owing to the sub-prime crisis and fears of recession in the US and its consequent effect on other countries, the global stock markets have seen significant correction. Crude prices have spiralled to above $100 levels. The Indian markets have not been spared either - the Sensex and Nifty are currently at 15,357 and 4,623 level (March 13, 2008) i.e. a correction of 28% and 27%, respectively.

In the given backdrop,investors are asking themselves and others: Is this the time to buy, hold or sell stocks? Certainly, a difficult question to answer as no one can accurately predict the future direction of stock markets.

Let’s consider a strategy advocated by Michael O’ Higgins in his book Beating the dow with Bonds published in 1999, wherein he says that investors should decide on investing in stocks, zero-coupon treasury bonds (T-bonds) (maturity of greater than 10 years) or one-year T-Bills (original maturity at issue of less than or equal to one year), whichever look to offer better returns, based on certain parameters. After having identified which financial instrument to invest in, an investor would invest 100% of the available funds for a one-year period after which the analysis is repeated and the strategy is decided afresh. Let’s study the procedure

So how has this strategy performed? A study conducted by Michael O’ Higgins, for a period from 1972 to 1998 using the DJIA, indicates that the strategy of either investing in stocks, T-Bonds or T-Bills for a period of one year would have generated an average annual return of 23.77% as against 11.66% generated by the DJIA.


Currently, the BSE Sensex, BSE100 and NSE Nifty quote at a P/E ratio of 22.23, 22.50 and 19.72, respectively - average of 21.48, implying an earnings yield of 4.65%, as compared to a bond yield on 10-year G-secs of 8%. Gold has appreciated by a whopping 49% over the last one year.

Thus, an investor’s strategy would be to go long (buy) one year T-Bills to take advantage of the higher yields. Historically, a P/E ratio of 15 for the stock market of 15 is considered a fairly valued. Hence, the P/E of the Indian Indices currently way above the benchmark of 15 makes the above investment strategy even stronger.

If one feels that a P/E ratio of 15 is reasonable, then the BSE Sensex and NSE Nifty could fall to 10,500 and 4,800, respectively. Thus, there is a strong case for adopting the above referred investment strategy of going long on short-term debt securities.

The Indian economy is currently witnessing an annual growth rate of 8% and the corporate sector is showing robust progress and profits, albeit it’s showing some weakening trends now. Hence, an investor could start gradually investing at BSE Sensex 12,500 level from a long-term perspective.

Remember, the stock market is a reflection of psychology as well as earnings, dividends and asset value. Thus, investors need to prudently decide their investment strategies, depending upon their risk-return appetite and after evaluating the pros and cons of each strategy.

Fiscal Report: Investors gaining only on half of portfolio

MUMBAI: If stock market be considered a game of snakes and ladders, there has been almost one snake for every ladder in the current fiscal, which is about to end with just six days of trading left.

On the face of it, this might appear to be an even score, but it means that an investor who entered the stock market at the beginning of the fiscal has suffered losses on one stock out of every two purchased.

According to an analysis of market values of close to 2,360 companies that were listed on the bourses at the beginning of the current fiscal and whose shares are still being actively traded, the market value has taken a hit or remain almost unchanged for nearly half of them.

While close to 1,100 companies have seen their market capitalisations actually dropping from the levels at the beginning of the current fiscal, that of more than 150 companies are almost unchanged from those levels.

The analysis does not include companies that were listed on the bourses during the fiscal through IPOs, de-merger or as part of other corporate decisions. There were close to 2,500 stocks being traded actively at the beginning of the current fiscal, while the number has grown past 2,700 at present.

Besides, the list of the prominent losers in the course of the current fiscal includes blue-chips like TCS, Infosys, Wipro, Satyam, Tata Motors, Hindustan Zinc, HCL Technologies, M&M, Cipla, Dr Reddy's Labs and Indian Hotels.

Together, 1,101 companies have lost close to Rs 2,62,000 crore since the beginning of this fiscal. However, the total gains registered by the remaining companies stand at about Rs 14,00,000 crore, mainly due to huge gains recorded by blue-chips like Reliance Industries, ONGC, NTPC, Bharti Airtel and SBI.

Retail biggies discover future in hypermarket format

AHMEDABAD: Hypermart is the flavour of the season. The big guns of organised retail have entered new markets with small-sized supermarkets and branded convenience stores. Now they are ready for bigger investments and larger formats.

Reliance, Aditya Birla and Tata’s Star Bazaar are focusing on large European-style hypermart roll-out while old hands like Spencer’s and the Future Group too are scaling up their hypermart formats. Hypemarket are the next stage in retail revolution for some brands. They will get higher margins, volumes and more brand recognition.

“The supermarts have already established brands, now hypermarts can levearge that brand recognition and create a captive customer in smaller markets. European style of hypermarket with roomy isles and white lights seems to be favoured by the new players in India”, says a marketing consultant attached to an Indian retail business house.

According to a Technopak study, 66% of the total domestic investments in retail (estimated to be at $1,011 billion by 2017) would be done in hypermarts and supermarts formats. In the next five years, 32% of the new investment in retail is expected to be in the hypermarkets, says the study.

Typically, a hypermarket is weekend shopping destination that works on low price points and high volumes, covers a large floor area (anything from 40,000 square feet to 200,000 square feet) and has a larger catchment area. It is a combination of supermarket and departmental store and stocks a large amount of product categories, including groceries, general purpose goods to specific apparel and even automobiles etc.

The Tata, Reliance and Aditya Birla groups have by co-incidence of design launched their hypermarts in Gujarat during the beginning of this year. For most, it was a combination of easy availability of property in a reasonably mature market. “There was property easily available since retail development had commenced in Ahmedabad.

Since the hypermarket business was new to us, we wanted to test in a market that was value-conscious and gauge the results before spreading our footprint across the country,” Smeeta Neogi, brands head, Trent, told ET. Russell Burman CEO, hypermarkets, Aditya Birla Retail, says that the Gujarat opening and timing of hypermart is a coincidence.

“We have been planning it for sometime. It has more to do with which property developed early,” he said. More is planning to open some dozen hypermarts this year in NCR and across tier two cities in India. Reliance, which has already opened two hypermarts in Gujarat, is also rolling out the retail model across the country.

Shoppers prefer paying through cards than cash

BANGALORE: The only time Ruchi Vishwanath reaches out for cash from her purse, is when she has to pay her auto rickshaw fare. Otherwise, the PR professional who maintains two credit cards, swipes them for every transaction — grocery shopping, paying phone and electricity bills and other expenses.

“I use my card for every purchase even for a transaction of Rs 100 when I buy vegetables from the neighbourhood Reliance Fresh. I use the cards for all monthly shopping for my family,” she says.

Vishwanath (24) is part of the growing tribe of customers who’re increasingly choosing credit cards over cash in the retail space. “When we launched our hypermarket, the credit card usage accounted for 40% of our sale value. In the succeeding five months, this has touched 50% and we see usage growing every month,” says Viney Singh, MD of Max Hypermarkets, that runs Spar.

To consumers, cards are a combination of convenience and rewards. “Swiping my card saves me the hassle of visiting the ATM to withdraw money. While I can clear my utility bills with my ICICI Bank card, I cash in on the loyalty points with my Deutsche Bank card,” says Vishwanath.

With credit card becoming an easily accessible and aggressively marketed financial product, the consumer base and consequently, the usage has increased tremendously. Over the last three years, the credit card industry has grown at a compounded average growth rate of over 30%.

“The usage of credit cards at retail outlets has nearly doubled — from 30%-35 % two years ago to 50%-60 %,” says Nirupam Sahay, VP (marketing), SBI Card.

The transaction value of credit cards too has dropped and the usage has become more casual. “Credit cards are typically used for purchases above Rs 1,000. But nowadays people have started using them for even around Rs 500,” says Krishnan Govindan, head (marketing), credit cards, ICICI Bank.

Petro cards are among the most popular. “The departmental store category along with fuel and restaurant spending account for the most frequent swipes. In terms of value, jewellery , electronic goods and telecom account for a major chunk,” says Kusal Roy, head of Barclaycard India.

Warren Buffett:Famous investor in the world

Warren Edward Buffett (born August 30, 1930, in Omaha, Nebraska) is an American investor, businessman and philanthropist. He is regarded as one of the world's greatest stock market investors, and is the largest shareholder and CEO of Berkshire Hathaway.With an estimated net worth of around US$62 billion, he was ranked by Forbes as the richest person in the world as of March 5, 2008.

Often called the "Oracle of Omaha," Buffett is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth. His 2006 annual salary of about $100,000 is tiny by the standards of senior executive remuneration in other comparable companies, and when he spent $9.7 million of Berkshire's funds on a business jet in 1989, he jokingly named it "The Indefensible" because of his past criticisms of such purchases by other CEOs. He continues to live in the same house in the central Dundee neighborhood of Omaha that he bought in 1958 for $31,500, today valued at around $700,000.

Buffett is also a noted philanthropist. In 2006, he announced a plan to give away his fortune to charity, with 83% of it going to the Bill & Melinda Gates Foundation. In 2007, Buffett was listed among Time's 100 Most Influential People in The World.He also serves as a member of the board of trustees at Grinnell College, where his advice on asset management has led to Grinnell College having the second largest endowment of any liberal arts college in the United States.

Investment approach:

Buffett's philosophy on business investing is a modification of the value investing approach of his mentor Benjamin Graham. Graham bought companies because they were cheap compared with their intrinsic value. He was of the belief that as long as the market undervalued them relative to their intrinsic value he was making a solid investment. He reasoned that the market will eventually realize it has undervalued the company and will correct its course regardless of what type of business the company was in. In addition he believed that the business has to have solid economics behind it. Buffett's investment style is also heavily influenced by Phil Fisher.

The following are some questions to determine what business to buy, based on the book Buffettology by Mary Buffett:

* Is the company in an industry with good economics, i.e., not an industry competing on price. Does the company have a consumer monopoly or brand name that commands loyalty? Can any company with an abundance of resources compete successfully with the company?

* Are the Owner Earnings on an upward trend with good and consistent margins?

* Is the debt-to-equity ratio low or is the earnings-to-debt ratio high, i.e. can the company repay debt even in years when earnings are lower than average?

* Does the company have high and consistent Returns on Invested Capital?

* Does the company retain earnings for growth?

* The business should not have high maintenance cost of operations, high capital expenditure or investment cash outflow. This is not the same as investing to expand capacity.

* Does the company reinvest earnings in good business opportunities? Does management have a good track record of profiting from these investments?

* Is the company free to adjust prices for inflation?

Buffett also concentrates on when to buy. He does not want to invest in businesses with indiscernible value. He will wait for market corrections or downturns to buy solid businesses at reasonable prices, since stock market downturns present buying opportunities.

He is known for being conservative when speculation is rampant in the market and being aggressive when others are fearing for their capital. This contrarian strategy is what led Buffett's company through the Internet boom and bust without significant damage, although critics[attribution needed] have also noted that it may have led Berkshire to miss out on potential opportunities during the same period.

He also asks at what price is the business a bargain, and his answer typically is when it provides a higher rate of compounded return relative to other available investment opportunities.

Warren Buffett's letters to shareholders are a valuable source in understanding his investment style and outlook.

Public stances:

* Buffett has repeatedly criticized the financial industry for what he considers to be a proliferation of advisors who add no value but are compensated based on the volume of business transactions which they facilitate. He has pointed to the growing volume of stock trades as evidence that an ever-greater proportion of investors' gains are going to brokers and other middlemen.

* Buffett emphasized the non-productive aspect of gold in 1998 at Harvard: "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

* Buffett stated that he only paid 19% of his income for 2006 ($48.1 million) in total federal taxes, while his employees paid 33% of theirs despite making far less money. Others explained this difference by saying lower tax rates for dividends and capital gains are necessary to avoid punitive double taxation, since the dividend income was already taxed at the corporate level, and the capital gains were from after-tax income that was invested. [14]

* Buffett believes that the U.S. dollar will lose value in the long run. He views the United States' expanding trade deficit as an alarming trend that will devalue the U.S. dollar and U.S. assets. As a result it is putting a larger portion of ownership of U.S. assets in the hands of foreigners. This induced Buffett to enter the foreign currency market for the first time in 2002. However, he substantially reduced his stake in 2005 as changing interest rates increased the costs of holding currency contracts. Buffett continues to be bearish on the dollar, and says he is looking to make acquisitions of companies which derive a substantial portion of their revenues from outside the United States. Buffett invests in PetroChina Company Limited and in a rare move, posted a commentary[15] on Berkshire Hathaway's website why he will not divest from the company despite calls from some activists to do so.

* Buffett believes government should not be in the business of gambling. He believes it is a tax on ignorance.[16]

* Buffett's speeches are known for mixing serious business discussions with humor. Each year, Buffett presides over Berkshire Hathaway's annual shareholders' meeting in the Qwest Center in Omaha, Nebraska, an event drawing over 20,000 visitors from both United States and abroad, giving it the nickname "Woodstock of Capitalism".[citation needed]

* Berkshire's annual reports and letters to shareholders, prepared by Buffett, frequently receive coverage by the financial media. Buffett's writings are known for containing literary quotes ranging from the Bible to Mae West, as well as Midwestern advice and numerous jokes. Various websites extol Buffett's virtues while others decry Buffett’s business models or dismiss his investment advice and decisions.

* Buffett favors the inheritance tax, saying that repealing it would be like "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics".[17] In 2007, Buffett testified before the Senate and urged them to preserve the estate tax so as to avoid a plutocracy. Some critics have pointed out that Buffett (and Berkshire-Hathaway) may have a personal interest in the continuation of the estate tax, since they have benefited from the estate tax in past business dealings and are also involved in developing and marketing insurance policies which protect policy holders against future estate tax payments.

* Buffett has been recognized as most responsible for FASB 123 (r), or Stock Option Expensing on the GAAP Income Statement. When asked about the subject at Berkshire Hathaway's 2004 annual meeting, he compared the United States Congress and the Securities and Exchange Commission's decision to override FASB, who wanted to consider company-issued stock-option compensation as an expense, to a bill proposed in the Indiana house for Pi to be changed from 3.14... to 3.20.

* Buffett has held fundraisers for both Hillary Clinton and Barack Obama for president. He has not indicated who he will vote for, but he has expressed that both would make "great Presidents".

* Buffett called the 2007-present downturn in the financial sector "poetic justice"

* Mr. Buffett was inducted into the Junior Achievement U.S. Business Hall of Fame in 1997.

Historical timeline:

1943: (13 years old)

* Buffett filed his first income tax return, deducting his bicycle as a work expense for $35. [21]

1945: (15 years old)

* In his senior year of high school, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in a barber shop. Within months, they owned three machines in different locations.

1949: (19 years old)

* In 1949, he was initiated into Alpha Sigma Phi Fraternity while an undergraduate at the Wharton Business School at the University of Pennsylvania. His father and uncles were also Alpha Sigma Phi brothers from the chapter at Nebraska, where Warren eventually transferred.

1950: (20 years old)

* Buffett enrolled at Columbia Business School after learning that Benjamin Graham and David Dodd, two well-known securities analysts, taught there.

1951: (21 years old)

* Buffett discovered Graham was on the Board of GEICO insurance at the time. After taking a train to Washington, D.C. on a Saturday, Buffett knocked on the door of GEICO's headquarters until a janitor allowed him in. There, he met Lorimer Davidson, the Vice President, who was to become a lasting influence on him and life-long friend.[22]
* Buffett graduated from Columbia and wanted to work on Wall Street. Buffett offered to work for Graham for free but Graham refused. He purchased a Sinclair gas station as a side investment, but that venture did not work out as well as he had hoped. Meanwhile, he worked as a stockbroker. During that time, Buffett also took a Dale Carnegie public speaking course. Using what he learned, he felt confident enough to teach a night class at the University of Nebraska, "Investment Principles." The average age of the students he taught was more than twice his own.

1952: (22 years old)

* Buffett married Susan Thompson.

1954: (24 years old)

* Benjamin Graham offered Buffett a job at his partnership with a starting salary of $12,000 a year. Here, he worked closely with Walter Schloss.
* Susan had her first child, Howard Graham Buffett.

1956: (25 years old)

* Benjamin Graham retired and folded up his partnership.
* Buffett's personal savings are now over $140,000.
* Buffett returned home to Omaha and created Buffett Associates, Ltd., an investment partnership.

1957: (27 years old)

* Buffett had three partnerships operating the entire year.
* Buffett purchased a five-bedroom, stucco house on Farnam Street for $31,500.
* Susan was about to have her third child.

1958: (28 years old)

* Buffett had five partnerships operating the entire year.

1959: (29 years old)

* Buffett had six partnerships operating the entire year.
* Buffett was introduced to Charlie Munger.

1960: (30 years old)

* Buffett had seven partnerships operating the entire year.
* The partnerships were: Buffett Associates, Buffett Fund, Dacee, Emdee, Glenoff, Mo-Buff, and Underwood.
* Buffett asks one of his partners, a doctor, to find ten other doctors who will be willing to invest $10,000 each into his partnership. Eventually, eleven doctors agreed to invest.

1961: (31 years old)

* Buffett revealed that Sanborn Map Company accounted for 35% of the partnerships' assets.
* Buffett explained that in 1958, Sanborn sold at $45 per share when the value of the Sanborn investment portfolio was $65 per share. This meant buyers valued Sanborn at "minus $20" per share, and buyers were unwilling to pay more than 70 cents on the dollar for an investment portfolio with a map business thrown in for nothing.
* Buffett reveals that he earned a spot on the board of Sanborn.

1962: (32 years old)

* Buffett's partnerships, in January 1962, had in excess of $7,178,500 of which over $1,025,000 belonged to Buffett.
* Buffett merges all partnerships into one partnership.
* Buffett discovered a textile manufacturing firm, Berkshire Hathaway. Buffett's partnerships began purchasing shares at $7.60 per share.

1965: (35 years old)

* When Buffett's partnerships began aggressively purchasing Berkshire they paid $14.86 per share while the company had working capital (current assets minus liabilities) of $19 per share, this did not include the value of fixed assets (factory and equipment).
* Buffett took control of Berkshire Hathaway at the board meeting and named a new President, Ken Chace, to run the company.

1966: (36 years old)

* Buffett closes the partnership to new money.
* Buffett wrote in his letter “unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL.”
* In a second letter, Buffett announced his first investment in a private business — Hochschild, Kohn, and Co, a privately owned Baltimore department store.

1967: (37 years old)

* Berkshire paid out its first and only dividend of 10 cents.

1969: (39 years old)

* Following his most successful year, Buffett liquidated the partnership and transferred their assets to his partners. Among the assets paid out were shares of Berkshire Hathaway.

1970: (40 years old)

* As chairman of Berkshire Hathaway, began writing his now-famous annual letters to shareholders.

1973: (43 years old)

* Berkshire began to acquire stock in the Washington Post Company. Buffett became close friends with Katharine Graham, who controlled the company and its flagship newspaper, and became a member of its board of directors.

1974: (44 years old)

* The SEC opens a formal investigation into Warren Buffett and one of Berkshire's mergers.

1977: (47 years old)

* Berkshire indirectly purchases the Buffalo Evening News for $32.5 million. Anti-trust charges brought.

1979: (49 years old)

* Berkshire began to acquire stock in ABC. With the stock trading at $290 per share, Buffett's net worth neared $140 million. However, he lived solely on his salary of $50,000 per year.
* Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.

1988: (58 years old)

* Buffett began buying stock in Coca-Cola Company, eventually purchasing up to 7 percent of the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative investments, and one which he still holds.

1990: (60 years old)

* Scandals involving Greenberg and Gutfreund appear.

1999: (69 years old)

* Buffett is named the top money manager of the 20th century in a survey by the Carson Group, ahead of Peter Lynch and John Templeton.[23]

2002: (72 years old)

* Buffett entered in $11 billion worth of forward contracts to deliver US dollars against other currencies. By April 2006, his total gain on these contracts was over $2 billion.

2004: (73 years old)

* His wife, Susan, dies.

2006: (75 years old)

* Buffett announced in June that he would gradually give away 85% of his Berkshire holdings to five foundations in annual gifts of stock, starting in July 2006. The largest contribution will go to the Bill and Melinda Gates Foundation.[24]

2007: (76 Years old)

* In a letter to shareholders, Buffett announced that he was looking for a younger successor or perhaps successors to run his investment business.[25] Buffett had previously selected Lou Simpson, who runs investments at Geico, to fill that role. However, Simpson is only six years younger than Buffett.

2008: (77 Years old)

* Buffett becomes the richest man in the world according to Forbes.

Personal life:

Buffett married Susan Thompson in 1952. They had three children, Susie, Howard, and Peter. The couple began living separately in 1977, though they remained married until her death in July 2004. His daughter Susie lives in Omaha and does charitable work through the Susan A. Buffett Foundation and is a national board member of Girls, Inc.

On his 76th birthday Buffett married his longtime companion, Astrid Menks, who had lived with him since his wife's departure. Interestingly, it was Susan Buffett who arranged for the two to meet before she left Omaha to pursue her singing career. All three were close, and holiday cards to friends were signed "Warren, Susie and Astrid" (as per Roger Lowenstein's book, Buffett: The Making of an American Capitalist). Susan Buffett briefly discussed this relationship in an interview on the Charlie Rose Show shortly before her death, in a rare glimpse into Buffett's personal life.[27]

Buffett is an avid player of the card game bridge. He has said that he spends 12 hours a week playing the game.[28] He often plays with Bill Gates and Paul Allen.

In 2006, he sponsored a bridge match for the Buffett Cup.[29] In this event, modeled on the Ryder Cup in golf (and held immediately before it and in the same city), a team of twelve bridge players from the United States took on twelve Europeans.

In 2006 Buffett auctioned his 2001 Lincoln Town Car[30] on eBay to raise money for Girls Inc.[31]

Warren Buffett is currently working with Christopher Webber on an animated series with DiC Entertainment chief Andy Heyward. According to information presented by Buffett at the Berkshire Hathaway annual meeting on May 6, 2006, the series will feature Buffett and Munger in roles and the series will teach children healthy financial habits for life. Cartoon drawings of Buffett and Munger were displayed throughout the events during the weekend and the special movie before the meeting began was in animation form by Heyward.

In December 2006 it was reported that Mr. Buffett does not carry a cell phone, does not have a computer at his desk, and drives his own car,[32] a Cadillac DTS.[33]

Buffett's DNA report revealed that he is not related to the singer Jimmy Buffett and that his paternal ancestors hail from northern Scandinavia, while his mother's side most likely has roots in Iberia or Estonia.[34]

Philanthropy:

In June 2006, Warren Buffett gave approximately 10 million Berkshire Hathaway Class B shares to the Bill & Melinda Gates Foundation (worth approximately USD 30.7 billion as of June 23 2006; see [3]) making it the largest charitable donation in history. The foundation will receive 5% of the total donation on an annualized basis each July, beginning in 2006. Buffett will also join the board of directors of the Gates Foundation, although he does not plan to be actively involved in the foundation's investments.

Buffett also announced plans to contribute additional Berkshire stock valued at approximately $6.7 billion to the Susan Thompson Buffett Foundation and to other foundations headed by his three children. This is a significant shift from previous statements Buffett has made, having stated that most of his fortune would pass to his Buffett Foundation. The bulk of the estate of his wife, valued at $2.6 billion, went to that foundation when she died in 2004.[4]

His children will not inherit a significant proportion of his wealth. These actions are consistent with statements he has made in the past indicating his opposition to the transfer of great fortunes from one generation to the next. Buffett once commented, "I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing"[5].

The following quotation from 1988, respectively, highlight Warren Buffett's thoughts on his wealth and why he long planned to reallocate it:

"I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GNP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die. (Lowe 1997:165–166)

Analysts' Picks: Bank of India, Suzlon Energy, Orchid Chemicals, IDFC, Hinduja Foundries

Bank of India
CMP: Rs 269.3
Target price: Rs 466

Macquarie has retained its positive view and outperform rating on BOI and the bank remains its pick among state-owned banks. The broking house says that the scare on its forex derivatives portfolio is clearly overdone and the sharp sell-off in the stock is an opportunity.

“It’s FY3/09E PBV of 1.3x, with a PER of 5.2x, is very attractive, given its ROE of 26–28% over the next two years,” the report said. The brokerage also added that the derating is far more severe than the bad news warrants. It also said that the farm loan waiver may affect future NPL slippage in the agriculture lending sector, but opined that it will not be large enough to warrant significant earnings revisions at this stage.

Suzlon Energy
CMP: Rs 269.9
Target price: Rs 450

Broking house Morgan Stanley is overweight on Suzlon Energy. However, it has lowered its price target to Rs 450 from Rs 498.6 earlier. “We would be buyers on the weakness generated by Suzlon’s announcement of a one-time write down of Rs 1 billion for the strengthening of the blades for its 2.1 MW turbine.

While the one-time provision would wipe out 8% of our F2008 earnings for the company (if it were not one-time), we believe that the market is more concerned about the issue becoming a recurring expenditure,” says the brokerage in a note to its clients. It believes that the market has overreacted on fears that the provision will become a recurring expenditure.

Our revised price target of Rs 450 implies a 79% return from current levels, reflecting our belief in the company’s strong growth story backed by its vertically integrated business model,” it says. “It is one of the cheapest capital goods stocks in India. We reduce our target because of the downward revision in earnings for financial year 2009-10,” the brokerage said.

Orchid Chemicals
CMP: 219.4
Target price: Rs 386

Citigroup has put a buy rating on the pharma major, but warned that it is raising its risk rating to high, to factor in Orchid’s heavy dependence on Tazo-Pip.

“Given the high visibility into its key product launches and its record of good market share in the US, we expect Orchid to record an EPS CAGR of 48% (FY07-10), which should raise valuations. We cut estimates to factor in a stronger INR, launch delays, higher interest cost and the latest equity dilution,” the broking house said.

However, it feels that the concerns over its balance sheet and inconsistent delivery are fair but priced in at the current valuation of 10x FY09E EPS.

IDFC
CMP: Rs 167
Target price: Rs 236

Prabhudas Liladher has reiterated its out performer rating on the stock as the news of IDFC acquiring Standard Chartered Bank’s asset management business in India came in. The deal valued StanChart MF at Rs 8.3 billion, i.e. 5.8% of AUM.

This acquisition will take IDFC’s total AUM to $4.2 billion, which is now expected to rise to over US$7.5 billion in the coming two years, it says. Although it points out that although the deal is cheaper compared to Reliance-Eton deal, it is still fairly steep.

Through it back of the envelope calculations, PL says that valuation of over 12 times current revenue run rate is justifiable only if IDFC is able to significantly accelerate AUM growth at the fund, which has been underperforming the industry growth considerably.

Hinduja Foundries
CMP: Rs 174.9
Target price: NA

Edelweiss has initiated coverage on the company by asking its clients to accumulate the stock. The broking house says that there is growing demand for automotive castings from the domestic and overseas markets and the company being a industry leader will benefit.

“Revenue CAGR of 23% during FY07-10E with increasing customer diversification has helped the company. HFL has gradually reduced its exposure to the domestic CV market by moving into segments like passenger cars and tractors and is now targeting overseas markets,” the brokerage said.

HFL’s EBITDA margins are likely to improve in the next two years, given higher margins from its new foundry and better margins at the existing foundry at Ennore. Edelweiss estimates an EPS CAGR of 33% between FY08-10E, taking into account the dilution on account of the GDR issue that HFL is about to close.

Emkay's Picks: Elder Pharma, Sintex, Kalindee Rail Nirman

MUMBAI: Emkay Share and Stock Brokers has initiated 'buy' on Elder Pharma for target price of Rs 535. Unlike its peers, Elder chose the in-licencing model over manufacturing of generic versions of patented molecules, which has helped it build high credibility in the international space.

The company expects more in-licensing deals going ahead to enhance product portfolio and drive growth. The recent acquisitions of NeutraHealth and Biomeda are strategic decisions to increase its global reach and the benefits of these initiatives will be seen over the next two to three years.

Emkay expects total exports to grow at CAGR 69.4 per cent over FY07-FY10E. Moreover, these acquisitions have created additional CRAMs opportunity for the company. Also, Elder is on its way to generating substantial cost savings by shifting its manufacturing activities to tax-free zones of Uttaranchal and Himachal Pradesh.

Emkay expects operating margins to improve by 200 basis points from 17.4 per cent in 2006-07 to 19.4 per cent in FY10E. It expects Elder to report strong growth in revenues at CAGR 27 per cent during FY07-FY10E. The brokerage expects the company to record net profit growth at CAGR 34 per cent during FY07-FY10E.

At the market price of Rs 375, the scrip discounts FY09E EPS of Rs 44.6 by 8.8x and looks attractive for long term investment.

Sintex Industries

Emkay has initiated ‘buy’ on the stocks for target of Rs 860. Having pioneered the "Plastic Water Tanks" in India, Sintex Industries has moved ahead to providing turnkey solutions like prefabricated structures, monolithic construction, custom molding for the auto & power sectors.

The major thrust of the government on rural housing, health & sanitation infrastructure coupled with increasing investment in telecom infrastructure holds good for the company.

Sintex is also benefited by the increasing use of plastic moldings for automobiles. The company also has a textiles division focused on premium segment which continues to provide steady cash flows to the company.

Emkay is positive on the company's strategy of innovating products in order to meet its market demand. Sintex is also undertaking growth through organic & inorganic route which will lead to increase in market share & entry into new markets.

The brokerage expects Sintex’s revenues and profit after tax for the period FY07- FY10E to grow at a CAGR of 55 per cent & 66 per cent respectively.

Kalindee Rail Nirman

Emkay has initiated ‘buy’ on Kalindee Rail for a price target of Rs 592, an upside of 48 per cent from current levels. Kalindee Rail Nirman, whose fortunes are closely linked to the infrastructure spends of the Indian railways, is on the fast track to growth. The ambitious capital expenditure plans of the Indian Railways have presented the company with a huge Rs 300 billion opportunity.

The upgradation of existing rail network, dedicated freight corridor, plans to set up metro rails and orders from private players to provide linkages are likely to ensure a fat order book for Kalindee Rail Nirman in the years to come, says Emkay.

At present, the company has an order book of Rs 500 crore with new orders worth Rs 300 crore to flow in over the next six months. Emkay expects the company to post 63 per cent and 88 per cent CAGR in revenues and profits respectively during FY07-10E period. The brokerage expects fully diluted EPS of Rs 10.1, Rs 23.6 and Rs 49.3 in FY08-10E.

Motilal picks: Maruti Suzuki, M&M, Tata Motors, Bajaj Auto, Hero Honda, TVS Motor

MUMBAI: Motilal Oswal Securities has maintained ‘buy’ on Maruti Suzuki. The company reported growth of 1.3 per cent in February 2008 sales to 63,822 units. Domestic volume growth was flat at 0.4 per cent; volumes were 59,311 units. However, export growth momentum remained robust, as sales increased 15.5 per cent year on year to 4,511 units.

During February 2008, sales growth in most segments was negative, except for the volume driver A2 segment (plus 2.7 per cent year on year) and the A3 segment (plus 8.9 per cent year on year).

Motilal believes that the lower domestic growth was due to postponement of purchases following expectations of excise duty reduction in Budget 2008. The brokerage expects strong volume growth from March 2008 onwards, boosted by the excise duty reduction from 16 per cent to 12 per cent on small cars (constituting 77 per cent of MSIL’s product portfolio).

Motilal believes that the reduction in the excise duty may lead to volume upgrades due to robust domestic demand. Currently, the brokerage expects MSIL to register volume growth of 16.1 per cent in 2008-09 and 16.5 per cent in 2009-10. The stock trades at 13.1x FY08E EPS of Rs 66.7, 11.4x

FY09E EPS of Rs 76.8 and 9.9x FY10E EPS of Rs 88.6.

Motilal estimates that the price reduction would average Rs 10,120 per car for MSIL.

Mahindra & Mahindra

Motilal has maintained ‘buy’ on the stock. M&M reported volume increase of 13 per cent year on year in February 2008 to 23,446 units (excluding Logan). Inclusive of Logan sales, volumes have increased 26.3 per cent year on year.

UV sales growth recovered strongly after two consecutive weak months in December and January, increasing 39.1 per cent year on year to 13,858 units. Scorpio sales increased by 28 per cent, non-Scorpio UVs by 34 per cent and exports by 170 per cent.

In passenger cars, Logan sales were also impressive at 2,751 units (plus 19.6 per cent month on month). However, tractor sales continued to disappoint, declining by 6.9 per cent year on year to 6,522 units; both domestic sales and exports declined by 7 per cent each. Three-wheeler volumes were also disappointing, declining by 22.8 per cent year on year to 2,347 units.

With several growth drivers for the company over the next few years coupled with attractive valuations, Motilal remains positive on M&M. The brokerage expects volume growth of 7.5 per cent and 6 per cent in 2008-09 and 2009-10 respectively for tractors, and 11 per cent and 10 per cent in 2008-09 and 2009-10 respectively in UVs.

While the agriculture sector growth is expected to be lower at 2.6 per cent in 2007-08, Motilal believes that the budget offers positives for the sector in terms of increased agricultural credit (Rs 2,400 billion by March 2008, target of Rs 2,800 billion by 2008-09) progress in Bharat Nirman, focus on water resources, and the debt waiver and debt relief scheme for farmers.

This is positive for tractor companies like M&M and Punjab Tractors. Their tractor volumes may see an upside from the continued agricultural and rural sector focus seen in the recent budget. The stock trades at 10.9x FY08E EPS of Rs 62.5, 9.2x FY09E EPS of Rs 74.7 and 7.9x FY10E EPS of Rs 86.9.

Tata Motors

Motilal has maintained ‘buy’ on the stock. Tata Motors reported total volumes of 54,181 vehicles for the month of Feb (plus 0.9 per cent year on year but lower 1.1 per cent month on month). Medium and Heavy Commercial Vehicles volumes were robust at 17,814 units (plus 0.6 per cent year on year and plus 7.9 per cent month on month); these are the highest monthly M&HCV sales in 2007-08.

Domestic M&HCV sales growth was also higher at 3.6 per cent year on year. Light commercial vehicles continued to witness robust volumes,

increasing by 29.5 per cent year on year, domestic LCV growth was 25 per cent. Total domestic commercial portfolio grew 12.8 per cent year on year in February 2008.

Passenger cars declined 19.4 per cent year on year, while UV sales were higher by merely 0.7 per cent year on year. The growth rate in passenger cars may have been impacted due to budget expectation of an excise duty cut. Tata Motors has announced price reductions in the range of Rs 8,500 - 15,300 on the Indica and Indigo CS after the Budget.

Motilal expects the passenger car industry to register a healthy growth rate in the coming months due to incremental demand from lower excise duty rates and increased disposable incomes following reduction in personal tax rates and higher slabs. The stock trades at 13.4x FY08E EPS of Rs 51.9, 11.6x FY09E EPS of Rs 59.6 and 10.3x FY10 EPS of Rs 67.4.

Bajaj Auto

Motilal has maintained ‘buy’ on the stock. Bajaj Auto reported volume decline of 9.1 per cent year on year in February 2008 to 183,807 units, with

disappointing volumes in all the segments. Motorcycle volumes declined by 7.6 per cent year on year to 158,662 units, while three wheelers sales were lower by 13.2 per cent year on year to 24,299 units.

However, export growth was robust at 65 per cent year on year to 63,182 units. The company has stated that 3-wheeler demand is lower due to poor domestic demand, but exports are expected to compensate for volumes. In motorcycles, the company has seen strong sales in its +125cc portfolio comprising of XCD, Discover, Avenger and Pulsar.

The company estimates that the 100cc saw a 13 per cent decline in volumes, while sales in the +125cc segment were stable, leading to a decline of 10 per cent in the motorcycle industry. The management has given guidance of positive overall growth for 2008-09 owing to the twin focus on bigger motorcycles and international markets.

Motilal believes that the lower domestic growth may be partially due to postponement of purchases following expectations of excise duty reduction in Budget 2008. The brokerage expects volumes to be boosted by the excise

duty reduction from 16 per cent to 12 per cent and it expects volume growth of 10 per cent in 2008-09 and 8 per cent in 2009-10 in motorcycles.

Motilal believes that the reduction in the excise duty may lead to volume upgrades due to robust domestic demand, thereby providing an upside to their estimates. The brokerage has lowered their volume estimate for BAL in 2007-08 and expects motorcycle volume decline of 8 per cent in 2007-08 (previous estimate decline of 5.5 per cent. EPS estimates stand reduced by 1.5 per cent and 0.9 per cent respectively for 2007-08 and 2008-09. The stock trades at 17.5x FY08E EPS of Rs 128.9, 14.9x FY09E EPS of Rs 151.1 and 13.4x FY10E EPS of Rs 167.7.

Hero Honda

Motilal has maintained ‘buy’ on the stock. Hero Honda has reported a volume decline of 5.4 per cent year on year in its sales for February 2008 to 265,431 units. Sales in YTD 2007-08 have declined marginally by 1.4 per cent year on year.

Hero Honda has announced a price decline in the range of Rs 1,000-2,400 after the excise duty cut in the budget. The company has said that it expects sales to improve post the reduction in the excise duty, and has passed on the entire benefit of the duty reduction to the customers.

Motilal expects volume growth of 8.6 per cent in 2008-09 and 8.1 per cent in 2009-10. A positive response to the lower excise duty rate may result in an upside to the brokerage volumes estimates for 2008-09 and 2009-10, while further extension of the credit squeeze provide a downside risk to the same. The stock trades at 16.7x FY08E EPS of Rs 46.2, 14.6x FY09E EPS of Rs 53.1 and 13.2x FY10E EPS of Rs 58.4.

TVS Motors

Motilal has maintained ‘neutral’ on the stock. TVS Motors reported 20.7 per cent year on year decline in its February 2008 sales to 95,235 units. The decline was again led by lower motorcycle sales (-34 per cent year on year) to 46,565 units. However, on a month on month basis, motorcycle sales increased by 19 per cent.

Scooter sales declined 29 per cent year on year to 14,126 units. However, moped sales were robust at 34,544 units ( plus 15.1 per cent year on year). Exports increased by a robust 56.2 per cent to 12,523 units.

TVS plans to relaunch the much delayed Flame with a new engine this month; this might provide respite to the declining motorcycle volumes. The management has reiterated that its volumes have been negatively impacted by restricted availability of retail finance, high interest rates, stringent norms being followed by financers and non-availability of the 125cc Flame due to legal reasons. The stock trades at 16.5x FY09E EPS of Rs 2.6 and 13.1x FY10E EPS of Rs 3.2.

Analysts' picks: Tata Steel, Allied Digital, BHEL, Container Corp

Tata Steel
CMP: Rs 773
Target Price: Rs 1,038

HDFC Securities has given a ‘buy’ on Tata Steel on expectations of economies of scale and growing steel demand. According to the brokerage, the valuations are compelling with increased integration milestone achievements and a bullish outlook on steel prices. It expects the demand for steel in Asia and Europe to grow at 4.8% and 1.4% compound annual growth rate (CAGR) respectively.

“Steel prices are expected to remain firm due to high raw material prices and rising supply constraints. Supply constraints in terms of poor port facilities at Australia and Brazil and high freight rates, will also keep the prices firm,” says the brokerage in a note to its clients.

Additionally, the synergies from the Corus acquisition is expected to start reflecting from financial year 2009, coupled with a reduction in concerns on financial leverage. Key risk factors include increased environmental awareness and exchange rates movements.

Allied Digital
CMP: Rs 697
Target Price: Rs 1,200

Broking house JP Morgan has initiated coverage with an ‘overweight’ on Allied Digital (ALDS). “ALDS is a play on the strong domestic demand for IT services with more than 90% of its revenues coming from India. We expect the stocks to deliver more sedate gains over the next 9-12 months, backed by high growth potential and management’s decent execution track record,” the brokerage said.

Indian domestic IT services is a $5 billion industry. It is expected to grow at a CAGR of 23% over the next five years to over $10 billion. JP Morgan believes the domestic IT exposure shields ALDS from concerns about a US slowdown, rupee appreciation and expiry of STPI tax benefits in FY10. The key drivers would be strong financial performance and possible acquisitions, using a part of the IPO proceeds, along with increased capacity utilisation of its remote IT management centres.

BHEL
CMP: Rs 2,026
Target Price: Rs 2,529

Citigroup has reiterated its ‘buy’ on BHEL, but with a downward revision in price target as it feels that its operating leverage which is largely over and the cost reduction efforts are working against it. “BHEL expanded EBIT margins from 0% in FY01 to 18% in FY07 and right-sized its workforce from 75,000 to 42,000 in four successive voluntary retirment schemes (VRS) from 1999 to 2003, cutting down operational costs and benefited from operating leverage,” said the brokerage in a note to clients.

Capital goods companies significantly expand margins when there is spare capacity and sales grow at a rapid pace benefiting from operating leverage.

“We believe that there is great likelihood of BHEL’s earning before interest tax (EBIT) margins peaking in FY08E. Once this happens, earnings growth has to largely track sales growth and will not benefit from operating leverage benefits,” it adds. The brokerage, however, terms BHEL its top pick in the Indian electric equipment rated universe.

Container Corp
CMP: Rs 1698
Target Price: NA

Merrill Lynch has retained its ‘sell’ recommendation on Container Corporation of India on not so attractive valuations, given muted growth prospects. However, the company does have some huge capex plans.

“We are raising earnings per share (EPS) driven by upward revision to volumes and lower margin erosion. Still, we expect muted 12% EPS compound annual growth rate (CAGR) over FY08-10, compared with 9% growth this year,” said the brokerage. The company is yet to finalise its scaled up capex plans of Rs 40 billion (from Rs 20 billion), to be spent over the next three years.

The brokerage believes that this will be largely directed towards initiatives across the value chain and through joint ventures, which will protect existing volumes and reduce project risk. However, the uncertainty and lag effect of benefits could impact stock performance. It believes that the stock is not attractively valued on traditional parameters, even though the stock trades at 13 times its one-year forward PE multiple.

IT sector pay hikes likely to taper out

BANGALORE: The great Indian IT dream job has probably lost its cult status. In line with the depressed market conditions and fears of business contraction, wage hikes in IT jobs are expected to be lukewarm, industry sources say.

The Indian IT services industry, which was witnessing an average annual wage hike in the range of 16%-20%, is likely to see a compansation increase in the range of 8%-12%. If this happens, it would be the second time in eight years that the industry will see a dip in wage growth rate. The last time when the industry saw lower growth rate in wages was during the dotcom bust in 2001-2002 period.

IT jobs, in its golden era, were attractive not just for the fabulous pay package but also stock options, which made many millionaires. Now the scenario is quite different. A recent survey by Hewitt Associates showed that in 2007 the real estate sector led the list with highest salary increase, leaving traditional leaders like IT and BPO way behind.
With the announcement of fourth quarter results next month, industry majors like TCS and Infosys are expected to set the tone on wages for the coming fiscal.

Although there is no firm decision yet, it is expected that increments could breach the sub-10% barrier or be in the very low double-digit range at the very best, according to industry sources.

The moderate wage outlook will perhaps not come as a surprise with the IT services industry battling on various fronts like recessionary trends in its key market in the US, volatile currency and HR challenges like attrition and lack of industry-ready talent.

Large companies have been reporting a steady involuntary attrition level, translating into a few hundred employees every year. In fact, companies have been talking tough and job losses on performance parameters are not so uncommon anymore.

TCS had recently announced minor cuts in its variable pay, a move that is being seen as a sign of things to come. The current scenario could also be a blessing in disguise for the industry. A study by neoIT titled ‘Redistribution of global arbitrage’ said, “The current rate of wage inflation in India is unsustainable.... these increases (can) quickly price India out of the global market.”

Typically, increment levels for onsite and offsite employees are different. Industry observers say, while the average wage hikes may be 10% or thereabouts, there would be spikes based on parameters like skillsets, performance and experience.salaries at the base of the pyramid would be higher compared to layers above.

Culture of risk on Wall Street not seen changing

NEW YORK: Wall Street investment bankers got another lesson about the dangers of risk-taking this past week with the downfall of Bear Stearns Cos. The question now obviously is, how long will it last?

Those bankers, many of whom lived through market debacles like the dot-com bust at the start of this decade, turned out to have very short memories. And so analysts believe the sale of Bear Stearns to JPMorgan Chase & Co. for a stunning $2 per share ultimately won't have that much of an impact on how Wall Street conducts business.

In fact, bankers and traders are under even more pressure to reap big returns because of the ongoing credit crisis, and risk is just part of the game.

``There's an old saying on Wall Street that, for traders and bankers, you'd have to take a normal 30 year career and distill it to 15 years,'' said Quincy Krosby, chief investment strategist for The Hartford. ``This whole episode might change Wall Street for a little while.''

Krosby believes that Bear Stearns' near-collapse, which followed the company's investing too heavily in risky mortgage-backed securities, might force some bankers to change their ways in the short term. But it will not be enough to temper the financial industry's relentless pursuit of money.

Indeed, the past decade has seen a number of investing fiascoes that Wall Street does not appear to have learned much from. Krosby noted the go-go Internet days _ when untested high-tech companies reaped piles of cash in public offerings. The lesson then was, do not put a lot of money into a venture that is not on fairly solid ground _ but mortgages granted to people with poor credit are quite akin to high-tech firms that had never turned a profit. In both cases,investors gleefully looked past the risk.

Now investors are smarting from what happened to Bear Stearns. And traders are somewhat chastened, for now.

Erin Callan, the chief financial officer for Lehman Brothers Holdings Inc., said her firm has certainly become more wary about the risks it takes amid the credit crisis. However, the market's gyrations also offer Lehman's army of traders an opportunity to make money.

``We just try to come in, and run the business the best way we can,'' she said. ``But, you can't survive if you take no risks at all. All we can do is plan in this environment, making sure we do all the things to optimize running the firm.''

It seems there is little that will change an industry and a lifestyle attached to Wall Street, which is thought of by Americans as more than just the center of free-market capitalism. Its culture attracts men and women with a swashbuckling mentality _ smart, aggressive risk takers with the potential to become very rich.

And, their skills in trading and investment banking were proven this past week _ even after news of Bear Stearns' buyout.

Chief executives at Morgan Stanley, Goldman Sachs Group Inc., and Lehman Brothers pointed out that trading desks played a big part in offsetting massive mortgage-backed asset write-downs, which have ticked past $156 billion (euro101 billion) for global banks since last year.

As the three companies released first-quarter earnings data, Morgan Stanley said equity trading revenue surged 51 percent to $3.3 billion (euro2.1 billion). Revenue at its fixed-income sales and trading group dropped 15 percent to $2.9 billion (euro1.9 billion), but it was still the firm's second-highest performance ever despite having to write down $2.3 billion (euro1.5 billion) linked to subprime mortgages and leveraged loans.

And that pleased investors. Morgan Stanley had its largest gain in more than a decade on Wednesday, climbing 18.8 percent to $42.86. Rival investment banks also had their best week since 2001.

But, investors should not get too comfortable _ the investment banking industry, and Wall Street in general, still have a long way to go before they can be called healthy. It is not just the credit market problems that are an issue, it is also the struggling U.S. economy and its potential to hurt other countries.

``Until we feel more certain about the worldwide economies, we don't see things picking up dramatically,'' said Goldman Sachs CFO David Viniar. ``We just need to keep plugging away.''