Augmented Intelligence combining human and AI to change behavior

Featured in: Big Data, Big Ideas & Innovation, Entrepreneurship, Healthcare, Technology

Artificial Intelligence, or AI, is the most promising and overhyped technology of our times. AI techniques such as deep learning have allowed computers to match or even beat world experts at games like chess and Go, and even board-certified doctors at diagnosing diabetic retinopathy and skin cancer.

While AI is great for recognizing patterns in puzzles and pictures, it is much harder for AI to change the behavior of people, in all their fascinating and frustrating complexity. In an earlier post on the Keystone Habit, I introduced the concept of using goals and habit change loops for personal development. Now let’s explore how to combine these loops for product development, in order to design a system to help someone change.

Here, I argue that human intelligence is better applied to helping people form goals, while AI is better applied to helping people form habits. This is not to say that an effective fully-automated AI system could not be built. But if you already have human and software resources, they can be synergistically combined to create an “Augmented Intelligence” system for behavior change.

The Sepah Behavior Change Model:

While there are a lot of behavior change models out there, I created a new model to integrate two important concepts—the goal formation loop on the left, and the habit formation loop on the right—into a unified loop that allows for continual improvement. Let’s walk through an example of how this works:

Plan the Goal:

All behavior begins with intention. Let’s say my intention is to exercise more often. While I may want to start working out every day, I decide to work with a personal trainer who takes into account my current routine to help me set a S.M.A.R.T. goal, that is Specific, Measurable, Agreed Upon, Realistic, and Time-Bound. For example, since he knows my gym is conveniently located two blocks from my work, and I’m more motivated to exercise in the morning because I work long hours, we mutually set a goal of going to the gym next to my work at 7:30AM, to lift weights for 30 minutes on Monday, Wednesday, and Friday, and to check-in at week’s end.

Theoretically, an AI-based system could also ask me a series of questions about my routine and preferences, then creates a reasonably-tailored S.M.A.R.T. goal for me. But these systems often run into problems adjusting goals over time, as we’ll see later in the loop, which is why humans are better suited to plan and revise goals.

Act on the Goal:

Next comes an attempt to act on the goal. I’m motivated on Monday morning, and I successfully go to the gym for 30 minutes before work. Great! Action is the centerpiece of the model for good reason, since goals are merely dreams without action. It’s worth noting that inaction, such as procrastination, is counterintuitively an action itself (what the Taoists call ‘Wu Wei’, the action of inaction). So whether you do or you don’t, you’re still acting. The difference is direct action takes you towards your goals and values, while avoidance takes you away from them.

Reward the Habit:

Here we cross into the habit loop: actions only become habits when they are repeatedly rewarded over time, even if the rewards are occasional. These can be intrinsic rewards (e.g. the mood boost from the workout) or extrinsic rewards (e.g. my personal trainer telling me I did a good job). While social reinforcement is an incredibly powerful motivator—it fueled the rise of phenomena like Crossfit—AI can reward habits equally well.

Gamification, which is the application of behavioral principles to game mechanics, is the best example of AI reinforcement. It successfully gets people to play video games for hours on end using tokens such as points and badges to designate accomplishment and skill development. This would seemingly pale in comparison to the sense of satisfaction that comes from a real person giving you a heartfelt high-five after a workout. But the high-five after every single workout can become repetitive, while gamified systems use variable schedules, quantities, and types of rewards (like how slot machines randomly dole out different jackpots) to prevent habituation and continually provide the addictive dopamine hit that powerful rewards bring.

AI is also superior to human reinforcement on an economic basis. While a personal trainer is motivational, they are usually not as cost-effective as an AI system emailing me a coupon for free protein shake at my gym when I achieve 3 workouts a week, or notifying me that I am among the top 20 most active gym-goers via an automated text message. Applications like Pact, DietBet, and Stikk are examples of companies that blend social and behavioral economic rewards to get people to go to the gym more often.

Remind the Habit:

Habits not only need to be rewarded, but they need a reminder (also known as a cue or trigger) to initiate the behavior regularly. Since I am out of town for work on Tuesday, I call the hotel front desk and set a wake-up call on Wednesday morning to remind me to get up for my scheduled workout. While that is an effective reminder, it is not a good use of human resources, which is why most hotels have automated wake-up call systems (or most people just use their smart phone’s alarm).

Though it seems obvious, Omada ran a randomized controlled trial to validate this hypothesis. We found an automated email performs just as well as a human coach in reminding a participant to weigh-in on our connected scale. Given that reminders are quick and easy, outsourcing this to AI is an effective move.

Act on Your Goal (Again):

For an automatic habit to form, the action must be repeated. My alarm goes off on Friday, but I am so sleep-deprived and tired that I decide to hit the snooze button. I text my trainer to cancel our session last minute, and fail to go for the third scheduled workout that week. Thus, I unfortunately fall short of my initial goal.

Reflect on the Goal:

Here we cross back into the goal loop by reflecting on the week and how well I’ve executed against my goal. This step is missing or glossed over in most versions of habit loops that you’ll see in books, but is critical if you want to continually iterate and improve upon your goals. In a previous article, I argued that reflection is the Keystone Habit when it comes to personal development, and articulated a concrete system to achieve your goals. Without reflection, we are doomed to repeat mistakes, and as I always tell my patients:

“a mistake repeated more than once is a decision.”
My trainer calls me over the weekend to reflect on our first week together. I share that I used my initial motivation to successfully go to the gym on Monday. I then used an alarm to remind me to go again on Wednesday, and was motivated by remembering the sense of accomplishment I felt after the first workout.

However, by the time Friday rolled around, we identified I was sore from starting a new exercise routine and the accumulated sleep deprivation from a long work week hindered my physical recovery and sapped my motivation. Here we see the power of human intelligence. While there were many factors that contributed to my skipping the gym on Friday, a quick conversation with my trainer identified the two major ones: muscle soreness and lowered motivation from sleep deprivation. An AI system has a much harder time identifying and isolating variables, especially psychological ones.

Plan the Goal (Again):

Based on the information gathered, my trainer and I work together to plan a revised goal for next week. He recommends I go to the gym next Monday and Wednesday at 7:30AM, but knowing I’m likely to be sleep-deprived and less motivated on Friday, recommends I go at 6PM just to warm up and stretch (thus reinforcing the habit of going regularly, while making the workout easy enough for my level of motivation). If that doesn’t work, we will switch the third weekly workout to Saturdays when I’m feeling more recovered and motivated.

Human intelligence shines at iterating on goals. Good trainers and therapists accurately identify individual strengths and barriers and leverage them to creatively optimize goals towards success. People’s physical and psychological states also vary tremendously on a day-to-day basis. Humans are better at picking up on these through our intuitive ability to read body language and facial expressions. Once a new goal is planned, the behavior change loop is executed repeatedly until the action becomes an automatic habit.

The Future of Augmented Intelligence

While AI has tremendous promise (and I advise AI startups in Silicon Valley because I believe they will be transformative), it’s currently better suited for specific intelligence, rather than general intelligence. When it comes to behavior change, AI is a clinically effective and cost-effective tool for habit formation by automating reminders for behaviors and providing variable rewards. But when it comes to goal formation, human intelligence (particularly that of an effective manager, trainer, or psychologist) is currently better leveraged to help people with goal planning and reflection to continually improve.

As a result, I believe the immediate future holds tremendous promise for hybrid systems, what I call “Augmented Intelligence,” which best combines human and artificial intelligence to change human behavior. Rather than replacing human coaching altogether, AI can support coaches by automating the easier tasks of reminding and rewarding habits. Thus freeing time to focus on what’s difficult and meaningful: helping others find and achieve their dreams.

source :- https://goo.gl/ZFxhI3

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Era of Big data – Revolutionary

The massive amount of big data from source generates in hour by hour.

Enterprise has learned to harvest big data to earn higher profit offer better services and gain a deeper understanding their target clientele.

The basically huge amount of data generates on a day to day basis volume of data not relevant as what organization do with data.

Analyze big data can lead to insight that improves strategic business decision marketing.

Big data – valuable

Harvesting big data from any source enable reduction of price, time etc.

Big data with high energy analytics
-    Identify reason for failure
-    Generating voucher – point of sale based

-    Automotive industry
-    Entertainment
-    Social media

Type of big data
-    Structure – refine – volume
-    Under structure – large volume – under values

Four variable – big data
-    Volume
-    Variety – Data source, Mass data append, speed of collection
-    Velocity – very high flow of data
-    Veracity – incompatibility

Some suggested Big data technology
-    MapReduce
-    Hadoop
-    Hive

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A Corporate Story for Every ever person

Every day, a small 🐜 Ant arrives at work very early and starts work immediately.

🐜 She produces a lot and she was happy.

The Chief, 🐯 a Tiger, was surprised to see that 🐜 the Ant was working without supervision.

🐯 He thought if the 🐜 Ant can produce so much without supervision, wouldn’t she produce even more if she had a supervisor!

So 🐯 he recruited a 🐝 Bee who had extensive experience as πŸ‘· supervisor and who was famous for πŸ“ writing excellent reports.

The 🐝 Bee’s first decision was to set up a πŸ”” clocking in attendance system.

🐝 He also needed a secretary to help him write and type his reports and he recruited a πŸ‡Rabbit , who managed the archives and monitored ☎ all phone calls.

🐯 The Tiger was delighted with the 🐝 Bee's reports and asked him to produce πŸ“Š graphs to describe production rates and to analyse πŸ“‰ trends, so that he could use them for πŸ“ presentations at Board‘s meetings.

So the 🐝 Bee had to buy a πŸ’» new computer and a Laser printer and recruited a 🐈 Cat to manage the 🌐 IT department.

The🐜 Ant, who had once been so productive and relaxed, hated this new plethora of paperwork and meetings which used up most of her time…!

🐯 The Tiger came to the conclusion that it was high time to nominate a person in charge of the department where the 🐜 Ant worked.

The position was given to the πŸ’ Monkey, whose first decision was to buy an Air Conditioner and an ergonomic πŸ’Ί chair for his office.

The new person in charge, πŸ’ the Monkey, also needed a πŸ’» computer and a personal assistant , who he brought from his previous department, to help him prepare a πŸ“‘ Work and πŸ“ƒ 'Budget Control Strategic Optimisation Plan' …

The Department where the 🐜 Ant works is now a sad place, where nobody laughs anymore and everybody has become upset...

It was at that time that the 🐝 Bee convinced the boss, 🐯 the Tiger; of the absolute necessity to start a climatic study of the environment .

Having reviewed the charges for running the 🐜 Ant’s department , the 🐯 Tiger found out that the Production was much less than before.

So he recruited the 🐀 Owl, a prestigious and renowned consultant to carry out an audit and suggest solutions.

🐀 The Owl spent three months in the department and came up with an enormous report, in several volumes, that concluded...

“ The Department is overstaffed ...”

Guess who the 🐯 Tiger fires first?

Of course, 🐜 the Ant.........,

"....because she showed lack of motivation and had a negative attitude. "

"The Characters in this fable are fictitious; any resemblance to real people or facts within the Corporation is pure coincidence only…" i am just sharing... I am not the Author.

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Interactive content - the featured story on the front page

Just to make sure we’re in sync, “interactive content” is content where the audience actively participates instead of just passively reading, watching, or listening. Iterative content includes things like quizzes, assessment tools, calculators, configurators, etc. (As a disclosure, I’m also the co-founder and CTO of ion interactive, a company that provides software to let marketers produce interactive content, which I’ve previously described as marketing apps.)

Now, The New York Times has published interactive content before — a number of interactive infographics, such as How Family Income Predicts Children’s College Chances, and several simple quizzes, such as a Did a Human or a Computer Write This? and political columnist Gail Collins’ satirical Fourth of July Quiz. But as far as I know, this was the first time they’d created an assessment with this much utility and featured it as the top story on their front page.

So what does this have to do with marketing and marketing technology?

Don’t worry, not planning on becoming a media commentator. But there are clearly many parallels between publishers and marketers these days. Primarily, both are struggling in The Great Content Wars — how to grab people’s attention and engage them in some meaningful way, so as to build and maintain a monetizable brand, in a world of essentially infinite content.

To break through the deafening noise, ironically, each has been advised to act more like the other. Native advertising, for better and worse, is one product of that rendezvous.

While there are still fundamental differences between marketers and publishers — underlying business models being the most obvious and important — there is enough overlap in their shared mission to produce and distribute content effectively that there are opportunities to cross-pollinate ideas from one to the other.

Interactive content really started taking off with BuzzFeed’s Which State Do You Actually Belong In? quiz, which has garnered over 40 million page views — and high praise from Mary Meeker of KPCB for the way they’re “reimagining content.” Marketers took the cue of its popularity, and have started producing quizzes as a more regular part of their own content marketing and demand generation programs. For instance, this example of a lead generation quiz by Orbitz for Business.

But simple quizzes only go so far. Most of them have more of an amusing, entertainment bent and offer relatively limited utility to participants. Marketers who have taken Jay Baer’s concept of Youtility to heart have pushed to develop more valuable interactive content for prospects. Two good examples are Dell’s Mobility Assessment and the quiz (which is really an assessment) embedded in this Pearson interactive e-book.

These are not sugary, snackable content puffs for a quick laugh and a share. These are meaty assessment tools that require thoughtful user engagement and deliver in-depth consultative results. (I would also suggest that they are ideal vehicles for improving sales and marketing alignment — but as I’ve already disclosed, I’m biased on this subject.)

The New York Times assessment on their home page is a significant step in that direction in the world of publishers though. I can’t think of any other mainstream news publisher that has built something as sophisticated as this assessment as a way of telling a front-page story.
This is definitely not boilerplate interactive content.

It will escalate more “software thinking” in content marketing design — which is an opportunity for companies to differentiate themselves online and an opportunity for tech-savvy marketers and marketing technologists to demonstrate the relevance and power of their hybrid skillsets.

It’s one more step along in our journey from communications to experiences.

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Rules for marketing like a billion-dollar by Jeremy Epstein

A “unicorn” company is one that achieves a private market valuation over $1 billion dollars. Growing as quickly as we did at Sprinklr helps you realize what’s essential for great marketing and what’s not, particularly if you are a start-up. The same applies even if you’re trying to jump start your marketing initiatives. As a former mentor said to me, “marketing is less about the sexy part and more just rhythm and process.”

Hopefully, you can benefit from our hard-earned lessons to accelerate your own efforts.

It’s critical to note that marketing isn’t all you need. I was fortunate to work for a great CEO, with many extremely passionate and talented people, and have a great product behind us. In other words, it was a serious team effort.

However, as the person responsible for marketing, I found these 14 rules for successful high-growth marketing helpful and hope you will too. I’ll highlight 6 of the 14 here and look forward to your feedback.

Rule #1: Don’t Confuse Activity With Outcomes

Activity feels good. Make a checklist, get the stuff done, check it off. But that’s not what you are paid to do.

If your goal is to lose weight, and you say, “well, I’m going to the gym every day, but the scale says nothing has changed,” then you are focused on activity, not outcomes. It’s critical to be super clear with yourself — and your team — about what you are trying to accomplish.

I’ll give you one example.

We had a telemarketing team (I called them “individual outreach”). Their job was to identify the right people at a target organization (we were going after Fortune 2,000) and secure meetings. A lot of orgs call these people “inside sales.”

Most teams like this send a boatload of emails that are copy/paste saying, “Here’s what we do, can I have 15 minutes of your time?”

It’s “spray and pray.” I know this to be the case because as VP marketing, I was on the receiving end of a ton of these.

While it does work (a bit) and generates some meetings, it doesn’t consider the number of people who now think less highly of your company. It also doesn’t really move the relationship between you and the prospect forward in any meaningful way.

Here’s what we did differently:

Our team would meticulously research people.

We looked at their Twitter profile, LinkedIn, blog posts, etc., until we had as deep an understanding of the person as we could get.

Then, each team member would write a highly customized, personalized email that clearly demonstrated the fact that he had done the research about the prospect (without being creepy — though admittedly, some people didn’t like it).

If you liked baseball, we would comment on it.

If you had just come back from a trip, we would ask about it.

If you recommended a book or an article, we might read it and explore the topic.

The point was: we took the time to get to know you as a person, and we were trying to engage on that personal level.

What happened?

We sent out a lot fewer emails per day than a typical organization, but our response rate was astronomical. People saw that we actually gave a damn about them as people. Not as number, but as real people.

They responded with comments such as:

“This is the best pitch email I have ever received.”
“Anyone who does this amount of work before contacting me is the kind of company I can respect.”
“What a refreshing change from the usual copy/paste!”
And this was a key driver in growing leads by 400% YoY.

The Lesson
This approach of highly personalized emails may not work for everyone and that’s fine, but the key thing we did was just asking ourselves, “What do we need to do?” Drive more initial meetings/leads.

Then we said, “Okay, given the way the world works today, what can we do to increase the likelihood of achieving that outcome?” But always stayed focus on the outcome.

Rule #3: Build Your Community of Advocates

While the advertising on the Super Bowl can be funny, emotional, or sexy, don’t get caught up in the glitz. You’re watching the Alamo of brand advertising and, unlike the really big guys (or people who don’t care about their money as much), you don’t have cash to burn.

The fundamental, earth-shaking shift that marketing has undergone in the past ten years is the explosion in the number of channels and the hyper-connectivity among people-anywhere, anytime, for free. To think that marketing would not change dramatically when the entire structure of modern life has been so upended is insanity.

That’s why our entire marketing effort began and focused almost entirely on our natural communities.

As we’ve all seen during the past election cycle, you’re not going to change people’s minds. Key point here: you’re going to be far better off finding the people who naturally agree with your worldview and turn them into raving fans than pretty much anything else.

I consider myself a disciple of Seth Godin, having become a fan after hearing him speak in New York in 1998. All we did was take his various ideas and put them into practice.

He calls this “First, Ten.”

He’s not alone though. Clay Shirky suggests 100 (I fell in love with his book 9 years ago). Kevin Kelly says it’s 1,000.

Again, the concept is the same. All we did was execute against it.

My personal favorite was our events. We did over 100 meet-up style events around the world, hosted by our clients and prospects, in which the presentations were attendee-driven.

Rule #4: Ask Not What Influencers Can Do for You, Ask What You Can Do For Them

Imagine you had a big social media following or gave a lot of presentations. Then, imagine that every single day, you get an email from some start-up saying, “Hey, will you promote our site, our product, etc., to your entire list?”

Why should they? What’s in it for them?

These “influencers” have built up a reputation as a trusted source of information. If they start flooding their feeds with “noise” instead of “value,” their influence will plummet. That’s not in their interest.

Instead, focus on how you can make influencers even smarter and more valuable.

Do you have proprietary data you can send them? Interviews with clients or early adopters? Cool use case stories?

That’s what they need. Give, give, give and then give some more until it hurts. It will be worth it in the end.

Rule #6: Do Creative Outside; Do PR In-House

You’re a technology start-up, not a creative agency. When you have a contract with a creative agency, you will more easily stop yourself from doing all the stupid things you come up with that you would just do if you had creative in-house.

The “Shiny New Object Syndrome” is real, especially at start-ups looking to move fast. You protect yourself from questionable creative ideas (and there are many) by putting the costs of paying them as a stop-valve. This creates the natural checks and balances that you need.

Without this built-in protection, you increase risk because you’ll end up burning a lot of time and money on the debatable creative ideas since the resources (your employees) are already paid for.

That being said, having a junior designer on staff who is just polishing PowerPoints so your sales guys and execs don’t put up total garbage does pay for itself.

On the flip side, PR agencies are great when you need surges of attention. For big “moments in time” (e.g., funding rounds or major product announcements), call in the reinforcements.

But the real value of PR comes from patience, focused storytelling, and non-transactional, external relationship-building. That’s how you climax to a series of great featured articles. You need someone with sustained attention and loyalty to your company. Plus, it’s almost always way cheaper.

Bottom line: in the very early stages, particularly in a disruptive market, you’re going to pay an agency a ton to educate them. The ROI isn’t there.

Key caveat: every now and then, you find an agency that really gets an industry, but they are few and very far between.

If you want to get super-technical, this is an extension on Coase’s Nature of the Firm.

Rule #10: Don’t Let the Perfect Be the Enemy of the Good (or the Corollary from Steve Jobs: “Real Artists Ship”)

Your job is to put items in market. What’s true for developers is true for marketers. You must be sensitive to the needs of the company and larger market trends. Respect your brand, yes, but you can’t wait forever. You need to move the market.

“Ship it!”

Rule #13: Communicate the Strategy

Write your strategy statement. Use the framework in this article. Make sure everyone knows it.

You will know if you are failing by doing an occasional pop quiz on your team. Ask them, “What’s our strategy statement?” Have them write it down for you right there. If everyone doesn’t write the same thing, you’re not doing your job.


I was a history major in college, so perhaps I’m biased, but I believe that learning from the mistakes of others is one of the cheapest ways to get ahead.

This is by no means an exhaustive list, but it might get you going in the right direction, save you time, money, and headaches, and free you up to make other errors.

Good luck, and never stop marketing.

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Todays Stock Market Summary Chart Of Friday February 7, 2017

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Will India grow at 7%? The government and the RBI still think so.  I think the 'official' GDP forecasts must be taken with a pinch of salt. The fact is that government does not know how much of an impact demonetisation had on the economy. Yet the official estimate of GDP growth is 7.1% for FY17.

Today's Loss for - SUN pharma ( 680-668-669)

The RBI's two-day monetary policy meeting is under way. Expectations are that the RBI will officially lower its growth estimate. This wouldn't surprise or worry us.

We would be more interested in what the RBI will do tomorrow on the policy front now that it has the data from the demonetization exercise.

Remember that banks did cut rates when they received a flood of demonetised notes. They are highly unlikely to cut rates without a repo rate cut from the RBI. Stay tuned for our analysis on the policy tomorrow.

Chart of the Day  

Speaking of the monetary policy, everyone and their uncle seem to be expecting a rate cut tomorrow. But no one seems to in agreement about the amount.

The repo rate (i.e. the rate at which the RBI lends to banks) stands at 6.25%. This level is quite reasonable we believe.

However, corporate India does not think so. As always before any RBI policy meeting, they have started clamoring for a rate cut. We even read a suggestion for a 0.75% reduction!
As today's chart shows, the repo rate has fluctuated in a range over the last six years. It is back to where it was in November 2010. The last change was a cut to 6.25% last October.

Repo Rate is Trending Down

So where to from here? It is entirely possible the RBI could reduce the rate a bit more. However, it cannot lose focus on inflation. With commodity prices showing signs of moving higher, the central bank will have to walk a fine balancing act without giving in to the whims of corporate India.

After opening the day flat, the Indian share markets traded on a negative note. Sectoral indices are also trading on a negative note with stocks in the metal sector witnessing maximum selling pressure.

The BSE Sensex is trading down 134 points (down 0.5%) and the NSE Nifty is trading down 38 points (down 0.4%). The BSE Mid Cap index is trading down by 0.3%, while the BSE Small Cap index is trading down by around 0.2%.  

Today's Investing Mantra         

"Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it" - Peter Lynch


Todays Stock Market Summary Chart Of Friday February 3, 2017

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  • 12 April 2013. Infosys corrected by a remarkable 22%, wiping off Rs 357 billion in investor wealth. The reason: disappointing revenue guidance.
  • 17 October 2014. Tata Consultancy Services (TCS) corrected by 8.5% in a single session. The reason: disappointing revenue guidance.
  • In Trump's first month as president, Infosys and TCS corrected by 8% and 7% respectively. The reason: prospects of disappointing revenue guidance.

 Do you see a pattern?

The recent correction of IT majors, though substantial, is nothing new for the sector. Nor is the reason for the correction.

The world is speculating on a Trump crash. So naturally, every correction to Indian IT is branded as a fallout from the Trump crash.

But is this so-called Trump crash a reason to act on Indian IT stocks? Of course, the answer does not depend only on stock prices. Other factors are relevant.

So we put three key questions to our in-house IT sector expert. Incidentally, they're the same three questions we asked in 2013 and 2014.

Is the business model affected? The immigration bill seeks to double the minimum salary for IT hires to US$1,30,000 from the current US$60,000. It also seeks to make a master's degree compulsory, among other requirements. And of course, the cost of the visa would go up.

Now, unlike what Trump would like to believe, Indian IT firms are no longer just back-offices to the world. Higher-value contracts have been critical to companies for several years now. And changing the mix of employees to comply with the requirements does no permanent damage to their business model.

Can the risk be hedged? Companies would need to adopt various counter measures, like hiring more locals, getting more work done from India or other offshore locations, cutting down on low-margin clients, and stepping up automation.

None of this is impossible to execute. And if done with long-term interests in mind, the onetime effort may be well worth it. So perhaps what some now perceive as a negative development will actually be a boon for certain Indian IT players.

What's the actual impact on fundamentals? If passed into law, the bill would put pressure on Indian IT firm margins inFY18. The actual impact, however, may differ from company to company. Several of them have reduced their exposure to the US in recent years. And even the companies that would hit hardest likely have enough cash on their books to recover from the shock.

Indian IT companies will need to rise to Trump's challenges. But fortunately, most were already gearing up for this. Trump may have only accelerated their defence.

So as long as you aren't worried about the revenue guidance in the coming quarters, you need to do just one thing: Stay vigil on valuations.

And you never know, the Trump crash may be an opportunity to act on not just IT but lots of other safe stocks as well.

Chart of the Day  

Large Indian IT companies, on an average generate more than 50% of their revenues from the US clients. They have built a strong client base over the years in the US market. If the suggested changes for immigration get cleared, the cost component for the Indian IT companies will go up. The need to reduce their US exposure and move to other geographies is a given.

Will Trump Mania Impact IT Companies Revenues from US?

But we believe that it is unlikely that the companies will substantially bring down their focus on the US. Instead companies may look out for other means to reduce costs or protect margins.

If you have been with us for long, you know that we have played the gentleman's game of value investing...and we have a solid track record of success there.

But you pay a price for this gentlemanly approach to investing. You have to patiently wait for the bulls to come to you. And you have to let go of many fast, raging bulls.

 Substantial part of the of central government expenditures are undertaken by state and local governments. Most states in India like the Centre run budgets where expenditure is higher than revenue, leading to deficits.

As reported in today's Business Standard, the fiscal responsibility and budget management (FRBM) review committee believes India's debt to GDP ratio will be 60% in 2023. This comprises 40% for the Centre and the balance 20% for state governments. As per the current available data, the outstanding debt positions of the Centre and state governments show the combined liabilities at 69.5%.

So containing this burgeoning debt is certainly a tall task for the government.

Generally, when the country's growth is soaring, some portions of debt is reduced. But that is nit excatly the case for FY17-18. The economy may continue to see impact of demonetization for months to come. Thus the nominal GDP growth may actually be much lesser than the projected11.75%.

The Budget has laid down large allocations towards social welfare. But it is important for the government to realize that while public spending is necessary, it will be important to keep its borrowings in check. Even the RBI has warned the government about this. 

In the meanwhile, after opening the day on a flat note, the Indian share markets have continued to trade on a weak note and are trading marginally below the dotted line. Sectoral indices are trading on a mixed note with stocks in the pharma sector and realty sector witnessing maximum buying interest. Auto stocks are trading in the red. 

At the time of writing, the BSE Sensex was trading down 68 points (down 0.2%) and the NSE Nifty was trading down 24 points (down 0.3%). BSE Mid Cap index was trading up by 0.6%, while the BSE Small Cap index was trading up by 0.8%.

 Investing mantra  

"Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a fly epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497". - Warren Buffett


Todays Stock Market Summary Chart of the Day Thursday February 2, 2017

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The markets reacted strongly with a near 500-point gain for the Sensex yesterday. But how should smart investors react to this budget? The dust settles and we take a closer look at it, one conclusion is unavoidable: Despite all of the speculation, hype, and hoopla in the days leading up to the budget, there's nothing really earth-shattering about it. It's just business as usual on most counts.

Yet, the kind of attention this exercise gets here in India, especially in stock market circles, it is only to be expected that the markets react strongly.

But from personal experience, I can tell you this: For many on D Street, it has become an outright excuse for speculation. The surrounding hoopla makes it difficult for investors to see through it. And easy to believe that they must 'do' something in response to it.

It is at times like these that it is most important to rise above the noise. Make no mistake, it is an important exercise and does affect some businesses more than others. But these differences in most cases are marginal and incremental. And seldom of the 'make or break' variety.

All put together, the annual budget exercise is very much a part of the 'normal' business landscape of companies. The multitude of tweaks made in it either help or harm the cause of a given company ever so slightly. But then again, that's true for all the continuous developments, both global and domestic, throughout the rest of the year.

Its collective approach to stock picking, its devotion to large safety margins in the purchase prices, and its dynamic debt component (fixed deposits/bonds) renders most developments that the economy throws at the business world, government budgets included, trivial.

MCM strategy as a sort of 'Chinese Wall' between the rough and tumble of the business world and our subscribers' returns. It ensures that over the longer term, our returns remain not just protected, but well ahead of the general market's returns.

Chart of the Day  

The Union Budget for 2017-18 was presented by finance minister, Mr Arun Jaitley yesterday. 

The markets seem to give a thumbs up to the budget, the Sensex closed up 486 points for the day. Does the budget play a crucial role for a serious long term investor? What role if any do the valuations play in prospective returns. We looked at the price to earnings ratio of the Sensex on the budget day as a proxy for valuations and noted the following 3 year compounded annual return going forward.

Budget or Not - It is the Valuation That Counts  -       

We found that the market returns are agnostic to the budget in the long run. What mattered more was the valuations at that point in time. Cheap valuations are a big driver of future returns.

Be it the Union Budget, GST or a great monsoon, you always got to ask the all-important question: Everything said and done, am I paying too much for the stock in relation to its intrinsic value?

For even though the budget may be path breaking and the economy may have some great years ahead of it, when you pay too much, even a good stock can quickly turn into a bad investment.

 After opening the day on a flattish note, the Indian stock markets fell below the dotted line. At the time of writing the BSE-Sensex was trading lower by about 42 points (down 0.2%), while the NSE Nifty was trading lower by 15 points (down 0.2%). Sectoral indices are trading on a mixed note with stocks in the metal sector and auto sector witnessing maximum selling pressure.     

                    Today's Investing Mantra         

"Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down" - Warren Buffett

FM Arun Jaitley said creating oil giant for compete with gloabl majors

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India's FM Arun Jaitley said on Wed, 1st Feb 2017 on Budget, planning for  creating giant oil company combine with state-owned firms for compete with global majors in acquiring foreign assets.

Struggling for raise local oil production and import about 80 percent. Prime Minister Modi try cutting to 67 percent by 2020. India is replacing China for consumption of Oil demand. India have oil companies like IOC, ONGC, HP etc.,


Todays Stock Market Summury - Chart of the Day 24 Jan 2017

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So exporting our way to prosperity is out of the question. As per the latest trade data, exports are flat (i.e. up 0.75% YoY) in the first nine months of FY17. This, after a steep fall over the last two years. 

So what about domestic investments. Unfortunately, today's chart does not present a happy picture. For 'Make in India' to succeed, speedy clearances are a must. In fact, this was one of Modi's main election promises. 

It was widely believed, if stalled projects could be cleared, India's GDP growth would get a boost. We will never know because they are still stalled! 

As per CMIE data and reported in the Mint, the total number of stalled projects are still rising. Surprisingly, four out of the last five quarters with the highest stalling rate on record, have been during the Modi government's tenure. A fifth of stalled projects are held up because of lack of government clearances. 

A deeper look at the data shows that there are three primary culprits: lack of funds, lack of promoter interest, and lack of environmental clearances. 

Lack of environmental clearances is holding up 14.48% of all stalled projects. This is about two-thirds of all projects stalled due to lack of government clearances. 

A lack of funds is an easy problem to explain. Banks are loaded with bad loans and are not likely to provide more funds without all clearances in place. Equity financing is also very difficult because of a high risk aversion to such projects. There's not much the government can do about this. 

A lack of promoter interest is a fascinating subject. It could be a reflection of disillusionment with either the Indian economy's prospects or with the government... or both. 

Whatever the case may be, one thing is clear to us; corporates are in no mood to make big investment commitments. This was true even before demonetisation. Now the wait will get longer. 

Thus, we believe only patient investors who can wait for a revival in the investment cycle, will be the ones to benefit from any positive surprise on this front.

Now that US plans to pull out, the deal may not happen. Even if it does without US, it would lose much of its significance as US alone accounts for a giant share.

Anyway, that's good news for India. This is because TPP could pose a serious blow to India's trade ambitions, especially when it comes to exports.

India is among the top textile exporters. A lot of companies in the organized and unorganized sector get a lion's share of their revenues from supplying to member nations of TPP.

With Trump abandoning the TPP, Indian textile manufacturers will heave a huge sigh of relief. A textile stock Richa recommended in 2015 in Hidden Treasure, holds good upside potential for long-term investors. This niche player has created a name for itself and is the preferred supplier to top quality shirt manufacturers around the world. Its unparalleled quality controls enable it to stay well ahead of competition. However, the stock crossed its maximum buy price today. 

Here is the lesson that should be learned. We may never be able to predict geopolitical events like Trump's election or his policies. But by buying fundamentally strong stocks for the long-term when they are available cheap, you can put the odds of winning in the market, firmly in your favour.
After opening the day in the green, the Indian stock market indices moved further into positive territory. Auto and capital goods, stocks were leading the gains. 

At the time of writing, the BSE Sensex was trading higher by 222 points (up 0.82%) and the NSE Nifty was trading higher by 73 points (up 0.86%). The BSE Small Cap and BSE Mid Cap indices are trading higher by 0.6% and 0.7% respectively.

Is India ready for Make in India? 

The India story is India. Not the world. 

If we look at some basic data - say, the per capita consumption pattern across the world - India stands in the lowest cadre. 

Consider the following:
  • Autos - India: 18 cars per 1,000; US: 800 cars per 1,000
  • Footwear - India: 1.66 pair per annul; developed nations: 6-7 pairs p.a.
  • Broadband - India: 1.4% of the total population; US: 28% of the total population
  • Airports - India: 464; US: 15,079

The above data clearly shows India is an 'India story'. The opportunity to catch up to global counterparts across sectors is huge. 

However, it is important to note that make in India for India will only succeed if it is at competitive prices compared to the world. 
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