Similarities of a school and BPO

It’s a kind of cliche nowadays. "BPOs and call centers have raised living standards of Indians and the youth in particular". On first glance it should be a real truth as evident in increase in employment, increase in spending, sprouting malls, coffee joints etc. They say everything is a cycle. This BPO or a Call center job also takes the cycle back to the school days. The days where in you are expected to maintain utmost punctuality, adherence to time tables etc. Here in BPOs swipe in & swipe outs, scheduled breaks are very much prevalent and more so critical. Nothing to be blamed .As they are the characteristics of an industry. Characteristics that actually translate into profits. However the outcome expected of a school’s rules and regulation is Discipline. Here in the BPO it is mere profit. So it would only be befitting to say that we turn back to a school kind of life at BPO’s and call centers sans discipline. Add to that the woes of wicked timings of work. People get contracted with all kind of stress related problems. If we take a penetrative look the woes are abundant. Take for example a guy from a second tier city who has done a 3 year course in some arts & science discipline(like my place karur,trichy etc).4-5 years back this arts & science guy would have himself cursed of not pursuing a engineering career. However he would simply try and pursue some PG course or specialized (NIIT) course to make himself as much saleable in the market. But nowadays call centers are beckoning. If youa re able to speak some good english the call centers readily offer a job with good salary (atleast equivalent to techies in the initial stages). Now what happens is that the guy stops learning, stops from enhancing his abilities. Rather falls a prey to the call center requirements. This trend has already multiplied. People are shunning further learning. At a call center job also u do not face immense challenges so as the job and circumstances to groom you. All this will end up in knocking of the country’s intellectual wealth. Also loads of engineers and PG’s are wasting their precious talents and time in such jobs. This will have its drastic effects on a long term. Hence we go back and answer our question. Has BPOs and call centers improved life standards? May be it is a Mirage. But definition of Standards is something that makes sense. In that sense may be we are actually losing.

How to Choose the right Stocks (one of the steps)

Take guru Peter Lynch's investment mantra to heart -- one must first find the companies whose long-term prospects look good and have good management quality and then check whether their share price is under-valued using the PEG ratio.

PE ratio, that is the Price/Earnings ratio is a common valuation number used by investors in stocks. The PE number gives an idea as to whether the stock is under-valued or over-valued.

It is defined as: PE ratio = market price of the share / earnings per share.

Mathematically, the lower a PE stock appears, it's considered better than a higher PE stock. But is it really so?

Why do we buy a stock? We buy it so that when its price goes up, we can sell it and make profit. But why should the price of the share go up? Again simple, the price would go up if the company makes higher profits i.e. higher earnings per share (There are, of course, many other reasons for share prices to go up, but from the fundamental perspective, the price of a share is ultimately a reflection of it's profits).

Comparing the two i.e. the PE ratio and the EPS growth of a company gives a more meaningful picture. PEG ratio or the Price Earning Growth Ratio is defined as: PEG ratio = PE ratio / EPS growth rate

PEG ratio=1 This means that the share price is fully reflecting the company's future growth potential i.e. the share at today's prices is fairly valued.

PEG ratio>1 This indicates that the share price is higher than the expected growth in the company's profits i.e. the share is possibly over-valued.

PEG ratio<1 This indicates that the share price is lower than the expected growth in the company's profits i.e. the share is possibly under-valued.

Therefore, the PEG ratio tells us something more about the future potential of the company. It tells us whether the high PE is a superficial number or is supported by future growth prospects.