This is a video I made to promote unconventional methods to attain knowledge which can be complimentary to classroom education. I think these are great ways to learn and I used them extensively in my life.
Knowledge from unconventional sources by freerudite
Friday, May 3, 2013
The perils of the retail investors in Bangladesh
Co-authored by Asif Khan, CFA and Sajib Hossain, Lecturer of finance at Dhaka University. Original article appeared at Dhaka Tribune Website.
The Bangladesh stock market is still in an infant stage when we consider the maturity of investors, the quality of corporate disclosures and the strength of the regulators. Therefore, it is no wonder that the market in Bangladesh is highly driven by momentum where investors have short holding periods.
In the short run, the market tends to act like a zero sum game. If someone wins, someone else has to lose. This is the perfect situation for the slaughter of small retailers.
Let us go through the problems one by one:
Quality of earnings and financial disclosures:
The first major problem is related to the “quality of earnings” and the level of financial disclosures. Quality of earnings refers to the sustainability and trustworthiness of earnings numbers. At present, other than a handful of listed companies, it is very difficult for knowledgeable investors to trust the financial statements. The blame, to some extent, goes towards the auditing firms. However, the first step in preparing clean and transparent financial statements has to be taken by the companies themselves.
Secondly, the accessibility to financial statements is a big problem in itself. Many of the companies do not have websites, and even if they do, the statements are not uploaded in due time. The solution to this problem is to upload statements in the stock exchange websites.
Without access to trustworthy and timely financial statement it is not possible to do fundamental analysis.
Insider Trading:
Insider trading refers to the trading of shares by people who have access to material news flow, like earnings and dividends, before they are disclosed to general investors. Examples of such investors would be company management, audit firms, company directors etc. This harms the retail investors who get the news flow only after it has already been priced into the share.
The problem lies in the lack of a strong legal framework, along with the enforcement of such laws. For example, if a person earns Tk10m from insider trading and is fined Tk100 thousand, he will happily pay the fine. Therefore, in order to discourage insider trading, the scale of the punishment has to be increased by a large magnitude. We do realize that the regulators might not have adequate manpower to catch all cases of insider trading. However, even if they could set some examples by penalizing few high profile cases, that should work as an example to others.
Pump and dump strategies:
Next, we have pump and dump strategies. By cornering shares (reducing liquidity) and spreading rumors, some manipulators jack up the stock prices in order to dump their holdings on to the unsuspecting retail investors.
As the stock market is a sensitive issue, regulators and governments are sometimes afraid to take steps against market manipulators for fear of the market coming down. In the short run, that is a possibility. However, in the long run, these steps would be much more beneficial to all the stakeholders.
Lack of knowledge of investors:
The lack of knowledge of retailers, and even some institutional investors, is also a problem. Even today, stock bonus is considered to be something great and causes stock prices to go up significantly. When the target victims are not smart enough and need to rely on rumors to make money, they are likely to lose money in the stock market.
The players who will continue to make money will be the “insider trader” and the “large retailer” because of information and capital advantage. If these guys continue to make money, then someone else will lose it.
Lack of transparency in asset management industry:
The stock market is not for everyone. Not everybody has the time to study or learn it. Therein lays the importance of professional fund management. However, the present state of the managed fund business would deter most of the investors who would like to give funds for professional management.
Before giving funds to a management company, an investor needs to look at its track record, investment strategy, background of fund managers and top holdings. None of this information is available in Bangladesh. However, by not promoting transparency, not only are many investors forced to take a shot at investing by themselves based on rumors, the asset management industry is also not growing as much.
Conclusion
In such a situation, the chances for retail investors to make money will be limited. In the short run, the momentum chasing strategies could work out, but eventually the investor is likely to make losses.
We should not let the stock market turn into another tool for redistributing wealth from the poor to the rich. In a country where saving instruments are limited, the role of the stock market is crucial. Before everything else, we need to focus on corporate governance, minority shareholder rights and quality of auditing.
The Bangladesh stock market is still in an infant stage when we consider the maturity of investors, the quality of corporate disclosures and the strength of the regulators. Therefore, it is no wonder that the market in Bangladesh is highly driven by momentum where investors have short holding periods.
In the short run, the market tends to act like a zero sum game. If someone wins, someone else has to lose. This is the perfect situation for the slaughter of small retailers.
Let us go through the problems one by one:
Quality of earnings and financial disclosures:
The first major problem is related to the “quality of earnings” and the level of financial disclosures. Quality of earnings refers to the sustainability and trustworthiness of earnings numbers. At present, other than a handful of listed companies, it is very difficult for knowledgeable investors to trust the financial statements. The blame, to some extent, goes towards the auditing firms. However, the first step in preparing clean and transparent financial statements has to be taken by the companies themselves.
Secondly, the accessibility to financial statements is a big problem in itself. Many of the companies do not have websites, and even if they do, the statements are not uploaded in due time. The solution to this problem is to upload statements in the stock exchange websites.
Without access to trustworthy and timely financial statement it is not possible to do fundamental analysis.
Insider Trading:
Insider trading refers to the trading of shares by people who have access to material news flow, like earnings and dividends, before they are disclosed to general investors. Examples of such investors would be company management, audit firms, company directors etc. This harms the retail investors who get the news flow only after it has already been priced into the share.
The problem lies in the lack of a strong legal framework, along with the enforcement of such laws. For example, if a person earns Tk10m from insider trading and is fined Tk100 thousand, he will happily pay the fine. Therefore, in order to discourage insider trading, the scale of the punishment has to be increased by a large magnitude. We do realize that the regulators might not have adequate manpower to catch all cases of insider trading. However, even if they could set some examples by penalizing few high profile cases, that should work as an example to others.
Pump and dump strategies:
Next, we have pump and dump strategies. By cornering shares (reducing liquidity) and spreading rumors, some manipulators jack up the stock prices in order to dump their holdings on to the unsuspecting retail investors.
As the stock market is a sensitive issue, regulators and governments are sometimes afraid to take steps against market manipulators for fear of the market coming down. In the short run, that is a possibility. However, in the long run, these steps would be much more beneficial to all the stakeholders.
Lack of knowledge of investors:
The lack of knowledge of retailers, and even some institutional investors, is also a problem. Even today, stock bonus is considered to be something great and causes stock prices to go up significantly. When the target victims are not smart enough and need to rely on rumors to make money, they are likely to lose money in the stock market.
The players who will continue to make money will be the “insider trader” and the “large retailer” because of information and capital advantage. If these guys continue to make money, then someone else will lose it.
Lack of transparency in asset management industry:
The stock market is not for everyone. Not everybody has the time to study or learn it. Therein lays the importance of professional fund management. However, the present state of the managed fund business would deter most of the investors who would like to give funds for professional management.
Before giving funds to a management company, an investor needs to look at its track record, investment strategy, background of fund managers and top holdings. None of this information is available in Bangladesh. However, by not promoting transparency, not only are many investors forced to take a shot at investing by themselves based on rumors, the asset management industry is also not growing as much.
Conclusion
In such a situation, the chances for retail investors to make money will be limited. In the short run, the momentum chasing strategies could work out, but eventually the investor is likely to make losses.
We should not let the stock market turn into another tool for redistributing wealth from the poor to the rich. In a country where saving instruments are limited, the role of the stock market is crucial. Before everything else, we need to focus on corporate governance, minority shareholder rights and quality of auditing.
Saturday, January 12, 2013
Studies said that …………….
Everyday newspapers report
astounding discoveries by scientists and researchers. Some of this research is
done upon absolutely new topics. There are also tests done on existing topics
where the new study either agrees or disagrees with existing studies done on
the subject matter. The ones that get highlighted are usually (notice the word
“usually”) done by much acclaimed people with a lot of credentials. So for
laymen like us it is easier to agree with them rather than disagree. After all,
who are we to agree or disagree with these experts?
Now this raises a couple of
very interesting questions. At least they did for me. Firstly, how sound are
these studies? Are they unbiased and done through rigorous research? Secondly,
how do we react when we see these studies?
I got the answer of the first
question when I listened to numerous Econtalk podcasts. For the unaware,
Econtalk is a talk show hosted by Professor Russ Roberts of George Mason
University. What I realized is that these research findings which frequently
find the way to the newspaper headlines are not as sound or rigorous as we may
have assumed them to be. The distinguished researchers, many from top notch
universities of the world can be quite biased. They frequently manipulate the
data (data fitting) to ensure that the outcome matches with what they want to
show rather than what the truth is.
The newspapers only mention
the summary of the findings. However, we rarely have access to the data set used
to come to the conclusion. Even if we had access to all the data, how many of
us would have to look at it to check for mistakes. If another unbiased
scientist using the same methodology came to a similar conclusion then only we
can call the study quite robust.
However, just because some
people decided to be less truthful does not mean that there are no good
researchers. There are people following rigorous methods to come to
conclusions. There are also people who cite the weaknesses in their methodology
while submitting the results. Thanks to these people human beings have advanced
quite a bit.
Now we come to the other
interesting part. How do people react when they learn about the outcome of a
new research finding? This is where things get even more interesting. I have
seen the same person saying that there a new research on healthcare saying that
XYZ food has harmful side effects and the same person (another layman like me) on a different occasion trashing a separate research on a different food item . What has happened here?
“Confirmation bias” has happened.
How do we actually decide
which study to believe and which not to? Like I said, it is all about
confirmation bias. We just believe the one that we want to believe and ignore
all others. Other times, we also do a one person study by ourselves where the
only data set is us. Let me take an example of a study which concluded that
exercising makes us healthier. Normally I would just quickly relate to myself
and try to remember whether that applied to me. Maybe, I did exercise in the past,
but I never lost any body fat. I would then quickly say that the research is
rubbish because it never applied to me.
What did I wrong here?
Practically everything. Firstly, there are many variables that can influence
ones health. My one person study did not control for all the other variables.
Secondly, statistics gives a viewpoint about a large sample. I could very
easily be an outlier. But that would not necessarily mean that the original
research was wrong. Thirdly, I may not have even done the exercises correctly
and cheated on form. There could be many more.
Biases are and will remain an
integral part of human life. However, it would do all of us good to try to
minimize these biases. The first step is to be aware of them. Only then can we
try to minimize them while thinking or analyzing.
Easier said than done (saying
from personal experience).
Saturday, January 5, 2013
The need for heretics in the society
Disclosure: I have realized that my blog pieces rarely have a coherent flow and I tend to jump around from one topic to another. I wrote this piece after a long time. I guess the topic was something that was moving in my head for a long time.
Do not be shocked by the title. The word heretic has two different definitions according to Merriam-Webster.
Do not be shocked by the title. The word heretic has two different definitions according to Merriam-Webster.
1: a dissenter from established religious dogma; especially : a baptized member of the Roman Catholic Church who disavows a revealed truth
2: one who dissents from an accepted belief or doctrine
I am actually referring to the latter definition. The modern heretic is a non-conformist who challenges assumptions. This makes the heretic an outlier.
The amount of knowledge in this world is endless. In 2013, even with thousands of years of civilization the knowledge human beings have attained is probably about a drop in an ocean (in my opinion). There is just so much we don't know. There are also things we think we know but in reality what we know is incorrect. In spite of all this, we really love to believe that we know a lot and this problem is more so in our so called experts and politicians.
I tend to believe that the people who have reached the highest levels on knowledge in their specific disciplines actually realize how little they know. However, according to Ariel Rubinstein of Tel Aviv University many of these so called experts (and politicians) have a natural incentive to give the impression that they already know everything. But we do have a few people like Friedrich Von Hayek whom many considers as the Renaissance man of twentieth century economics. Von Hayek in his final works mentioned that the economy is just too complex for politicians to avert recessions and unemployment without unintended consequences that may well be worse. He advised politicians and economists to be a bit more humble.
Human being in general loves to follow the herd. We try to follow the recent fad and buy the shares that most people are recommending. I guess it gives us a sort of mental peace that even if what we are doing is wrong we are still with the crowd. And boy, do we love shooting down those who come up with radical thoughts.
But we NEED the outliers, the people who would dare to go against the crowd.The people who would challenge the theories which we have taken for granted. History has shown us that time after time that such people have emerged and their discoveries have changed the course of the entire world. But, easier said than done. It takes guts to go against the mass.
Personally I am guilty of acting like a so called EXPERT. So this is what I am advising to myself (and anyone else who is reading this post).
1. Always look at both sides of the table before coming to my conclusion. Only after neutrally looking at alternate sides can I come at a solution. In certain issues, like economics for instance their might not be a solution at all.
2. Encourage other people to be outliers. Do not shoot down people who hold the absolute opposite views than me. Be ready to change my view if enough evidence is shown.
3. Be more humble.
Saturday, May 5, 2012
How to utilize the last 30 days before CFA exam
Preparation for any exam is somewhat of an art and people use different techniques. Still, we know that hard work is the key to success. Also, there are some methods which work better than others. I just wanted to mention some of the techniques which I followed during the last 30 days or so in all the 3 levels of the exam. Hopefully these will help everyone.
General Tips for last 1 month
Mock Exams
• I usually used the final month to give 3-4 mock exams in the first 15-20 days or so. After every exam, I put in my scores in an excel sheet to see topic wise scores.
• While giving the exam I usually marked the questions which I found difficult and the questions which I just answered on guess work.
• Next, I identified my mistakes by looking at the correct answers for not only the mistakes but those I got correct through guesswork. When I was unable to understand the answer, I went back to the text book.
• When I scored poorly on a topic I revised that topic and then went for the next mock exam. I repeated the same thing for the next exams but also observed whether my scores are improving or not overall and my weaker segments. Usually I put a lot of emphasis on my ethics score.
Revision
• In the last 10-15 days I usually went for a revision of the whole syllabus. Usually I went LOS by LOS. The objective was to see whether I could understand the concept crystal clearly for all the LOS. Once a LOS was mastered I crossed it out.
• I constantly revised the formulas. I usually made my own formula sheet and used to carry it wherever I went.
Things not to be missed
• Make sure you have done ALL the end of chapter (EOC) questions from the original book. I would suggest that people do not waste time on questions from Schweser as real exam is very different from Schweser questions. If you have completed everything else and still have time then do Schweser exams.
• Some of the EOCs are quite complicated. I usually marked them to review them over and over again until I mastered them.
• Go through all the blue box examples from original book.
Planning for the 30 days
• I used to make a 30 day plan specifying what I will revise or read in the last 30 days. Sometimes I fell behind my plan due to family obligations or work pressure but by studying more on other days I used to cover it up.
• Normally I suggest that people try to beat their own plan and stay ahead.
Notes
• Some people make their own notes. I usually only made notes for the most critical chapters. However, notes are supposed to be made 3-4 months before exam. Trying to make notes at the last moment is not advisable as it will eat away time.
• If however you already have own notes then instead of reading the book you can just read your notes (depends on the depth of the notes).
Day before the exam
• This day is very important. Confidence level is as important as the preparation itself. To cool the nerves remember that you have studied hard and given your best shot. After this it does not matter whether you pass or fail.
• Try to go to sleep early. I had insomnia problems on this day on almost all three levels and as a result on the exam day I felt weak. If you see any such problems take a sleeping pill on the night before the exam.
• Check your admit card, pencils, eraser, pen, passport, calculator. Check your calculator settings and go through the important functions in your calculator. If you can borrow an extra calculator then borrow one for emergency purpose. Also carry batteries and screwdriver.
• Go through the formula sheet quickly. See if you correctly remember the notations and symbols used in the formula.
Exam day
• Wake up early in the morning and take a shower. Go to the venue as early as possible. Do not try to study just before the exam. You can off course take a look at the formulas.
• When the exam starts, go to your favorite topic and start answering. THERE IS ONE GOLDEN RULE I FOLLOWED. IF I COULD NOT ANSWER A QUESTION ON THE FIRST ATTEMPT I SKIPPED IT. I GOT BACK TO THEM LATER ON. Please do not waste time on any questions. All questions carry the same marks. However some of them can make you lose a lot of valuable time. TIME MANAGEMENT IS ESSENTIAL IN ALL 3 levels.
• Read all the questions carefully and understand what is being asked. The worst thing that can happen is failing due to silly mistakes.
• If the AM session feels exceedingly hard do not lose hope. In that case PM will be easier. I remember coming out of the Level 2 AM session with the feeling that I will surely fail. However the PM was much easier and I actually scored >70% in 9 segments and between 50-70 in 1 segment.
• While filling out answer boxes please make sure you are answering the correct question. A mistake in answering sequence could change your grade absolutely.
• Even if you have finished the exam with 1 hour extra please recheck all the answers.
• Fill out answers for each and every question as there is no negative marking.
Level 1
• In level 1 you just need to go through the entire syllabus. The actual exam is usually quite easy and has more focus on theoretical questions. The quantitative questions are also quite simple.
• Normally, you would not even have to think for many of the questions. Also, some of the quantitative questions can be answered without even calculating anything.
• Focus on the ethics segment which is very crucial.
• Overall you can expect to finish both AM and PM within 2.5 hrs. But like I mentioned earlier, please use the whole time and recheck.
Level 2
• Level 2 has the largest syllabus, highest number of formulas and much tougher study material compared to level 1.
• Even though the focus is on asset valuation and FSA, I found derivatives to be quite complicated. In fact, I probably had to read the derivatives chapter 3-4 times to get the basic essence of it. In spite of that, I found the actual derivative questions to be exceedingly difficult.
• Unlike level 1, the portion of quantitative questions is larger. Also the questions are not that straight forward. CFAI throws some curveballs from time to time. After reading a particular vignette the questions might look absolutely alien to you. Use your common sense in answering in those times.
• Put strong emphasis on formulas. Also notice whether questions states annual, quarterly or monthly compounding etc. These can be tricky while doing Swaps, Forward Rate Arrangements etc.
Level 3
• Level 3 syllabus is slightly smaller than level 2. It is not as difficult as level 2 to understand but the trick is to apply the knowledge in the actual exam.
• To pass level 3 the candidate must know the concepts like the back of his/her hand. Even the simplest topic can be made very difficult by structuring the question in an obscure manner.
• The key to succeeding in level 3 largely depends on managing time for the AM (written) section. I would recommend that candidates practice as many AM sessions as possible. CFAI website has a lot of such practice exams.
• Just because AM was difficult do not expect PM to be much easier. Some questions had a lot of curveballs which many candidates did not even realize existed. However it is easier to score more in the PM compared to the AM section.
Final Words
Give your best shot and study as hard as possible. However, success or failure also has a bit of luck in it. However know that you can pretty much pass if you get 70% on average. So even if you get 50% of the questions right, eliminate one wrong answer on 25% of the questions and blindly guess the rest 25% you can score about 70.75% statistically. Also the pass marks for level 3 is definitely set at a lower level.
General Tips for last 1 month
Mock Exams
• I usually used the final month to give 3-4 mock exams in the first 15-20 days or so. After every exam, I put in my scores in an excel sheet to see topic wise scores.
• While giving the exam I usually marked the questions which I found difficult and the questions which I just answered on guess work.
• Next, I identified my mistakes by looking at the correct answers for not only the mistakes but those I got correct through guesswork. When I was unable to understand the answer, I went back to the text book.
• When I scored poorly on a topic I revised that topic and then went for the next mock exam. I repeated the same thing for the next exams but also observed whether my scores are improving or not overall and my weaker segments. Usually I put a lot of emphasis on my ethics score.
Revision
• In the last 10-15 days I usually went for a revision of the whole syllabus. Usually I went LOS by LOS. The objective was to see whether I could understand the concept crystal clearly for all the LOS. Once a LOS was mastered I crossed it out.
• I constantly revised the formulas. I usually made my own formula sheet and used to carry it wherever I went.
Things not to be missed
• Make sure you have done ALL the end of chapter (EOC) questions from the original book. I would suggest that people do not waste time on questions from Schweser as real exam is very different from Schweser questions. If you have completed everything else and still have time then do Schweser exams.
• Some of the EOCs are quite complicated. I usually marked them to review them over and over again until I mastered them.
• Go through all the blue box examples from original book.
Planning for the 30 days
• I used to make a 30 day plan specifying what I will revise or read in the last 30 days. Sometimes I fell behind my plan due to family obligations or work pressure but by studying more on other days I used to cover it up.
• Normally I suggest that people try to beat their own plan and stay ahead.
Notes
• Some people make their own notes. I usually only made notes for the most critical chapters. However, notes are supposed to be made 3-4 months before exam. Trying to make notes at the last moment is not advisable as it will eat away time.
• If however you already have own notes then instead of reading the book you can just read your notes (depends on the depth of the notes).
Day before the exam
• This day is very important. Confidence level is as important as the preparation itself. To cool the nerves remember that you have studied hard and given your best shot. After this it does not matter whether you pass or fail.
• Try to go to sleep early. I had insomnia problems on this day on almost all three levels and as a result on the exam day I felt weak. If you see any such problems take a sleeping pill on the night before the exam.
• Check your admit card, pencils, eraser, pen, passport, calculator. Check your calculator settings and go through the important functions in your calculator. If you can borrow an extra calculator then borrow one for emergency purpose. Also carry batteries and screwdriver.
• Go through the formula sheet quickly. See if you correctly remember the notations and symbols used in the formula.
Exam day
• Wake up early in the morning and take a shower. Go to the venue as early as possible. Do not try to study just before the exam. You can off course take a look at the formulas.
• When the exam starts, go to your favorite topic and start answering. THERE IS ONE GOLDEN RULE I FOLLOWED. IF I COULD NOT ANSWER A QUESTION ON THE FIRST ATTEMPT I SKIPPED IT. I GOT BACK TO THEM LATER ON. Please do not waste time on any questions. All questions carry the same marks. However some of them can make you lose a lot of valuable time. TIME MANAGEMENT IS ESSENTIAL IN ALL 3 levels.
• Read all the questions carefully and understand what is being asked. The worst thing that can happen is failing due to silly mistakes.
• If the AM session feels exceedingly hard do not lose hope. In that case PM will be easier. I remember coming out of the Level 2 AM session with the feeling that I will surely fail. However the PM was much easier and I actually scored >70% in 9 segments and between 50-70 in 1 segment.
• While filling out answer boxes please make sure you are answering the correct question. A mistake in answering sequence could change your grade absolutely.
• Even if you have finished the exam with 1 hour extra please recheck all the answers.
• Fill out answers for each and every question as there is no negative marking.
Level 1
• In level 1 you just need to go through the entire syllabus. The actual exam is usually quite easy and has more focus on theoretical questions. The quantitative questions are also quite simple.
• Normally, you would not even have to think for many of the questions. Also, some of the quantitative questions can be answered without even calculating anything.
• Focus on the ethics segment which is very crucial.
• Overall you can expect to finish both AM and PM within 2.5 hrs. But like I mentioned earlier, please use the whole time and recheck.
Level 2
• Level 2 has the largest syllabus, highest number of formulas and much tougher study material compared to level 1.
• Even though the focus is on asset valuation and FSA, I found derivatives to be quite complicated. In fact, I probably had to read the derivatives chapter 3-4 times to get the basic essence of it. In spite of that, I found the actual derivative questions to be exceedingly difficult.
• Unlike level 1, the portion of quantitative questions is larger. Also the questions are not that straight forward. CFAI throws some curveballs from time to time. After reading a particular vignette the questions might look absolutely alien to you. Use your common sense in answering in those times.
• Put strong emphasis on formulas. Also notice whether questions states annual, quarterly or monthly compounding etc. These can be tricky while doing Swaps, Forward Rate Arrangements etc.
Level 3
• Level 3 syllabus is slightly smaller than level 2. It is not as difficult as level 2 to understand but the trick is to apply the knowledge in the actual exam.
• To pass level 3 the candidate must know the concepts like the back of his/her hand. Even the simplest topic can be made very difficult by structuring the question in an obscure manner.
• The key to succeeding in level 3 largely depends on managing time for the AM (written) section. I would recommend that candidates practice as many AM sessions as possible. CFAI website has a lot of such practice exams.
• Just because AM was difficult do not expect PM to be much easier. Some questions had a lot of curveballs which many candidates did not even realize existed. However it is easier to score more in the PM compared to the AM section.
Final Words
Give your best shot and study as hard as possible. However, success or failure also has a bit of luck in it. However know that you can pretty much pass if you get 70% on average. So even if you get 50% of the questions right, eliminate one wrong answer on 25% of the questions and blindly guess the rest 25% you can score about 70.75% statistically. Also the pass marks for level 3 is definitely set at a lower level.
Saturday, February 4, 2012
A message for the people of my generation
Do you have a university degree or are in the process of getting one? Did you start your career? If any of these criteria apply to you then this write up is meant for you. Regardless of your social and financial status, you still fall in the privileged class of the society. You might have worked very hard for reaching this stage but you CANNOT deny the contribution of luck and the millions of people working at minimum wages. Directly or indirectly, society did have an impact on your good fortunes. If you agree with me so far then you MUST show your gratefulness by giving back to the society. There are many ways of doing that but for now I want to talk about Zakat and Taxes.
Why should I give Zakat? I should give Zakat because it is not fair that some people are wasting their wealth while others are deprived of basic needs. I can give hundreds of more reasons but that is not necessary. Only additional comment I want to make about Zakat (I am not an Islamic Scholar so I am saying things from common sense) is that the intention is more important that the outcome. There is no hard and fast rule that one only gives 2.5% of liquid assets as Zakat. Why would you not give more if you can afford to give more? We frequently make up strange logic (cognitive dissonance) in our head and using that logic we try to justify that Zakat does not apply to us. These self made theories are utter bullshit. Today we might be the one in a position to give Zakat. Tomorrow, we can easily be the ones who would need the assistance.
Now, let me come to the issue of “Income Tax”. Less than 2% of the population pays taxes in Bangladesh. Income tax to GDP is probably one of the lowest in the world. This is pathetic. Why are we not paying our taxes? Firstly, we are not paying taxes because we are greedy. Secondly, we say that the government is corrupt and whatever money we are pay as taxes will go to their pockets. When I thought about the latter argument I found that this has no logical basis. If we can give vote to the two major parties we cannot say that they are corrupt and hence evade/avoid taxes. Also, we are using all the facilities that the state is providing using the money given by actual tax payers. We are using the roads, the street light, the public parks, enjoying the subsidies that government provides and what not.
Let us stop feeding ourselves all these lies just because we have become materialistic and greedy. Let us give the Zakat properly and if possible more than 2.5%. Let us pay our taxes properly and then fight for our right to information and transparency. We are accountable for our responsibilities as citizens and government is accountable for their parts. Allah would not make us responsible for the corruption done by the government but would definitely make us responsible if we are enjoying the benefits of taxation but not paying our taxes. In the worst case scenario, if you are adamant that you would not pay taxes then at least calculate your taxes and give that to people directly as charity. Once we are fulfilling our responsibilities let us go to our family and relative and ask them whether they are giving Zakat and paying taxes properly.
Why should I give Zakat? I should give Zakat because it is not fair that some people are wasting their wealth while others are deprived of basic needs. I can give hundreds of more reasons but that is not necessary. Only additional comment I want to make about Zakat (I am not an Islamic Scholar so I am saying things from common sense) is that the intention is more important that the outcome. There is no hard and fast rule that one only gives 2.5% of liquid assets as Zakat. Why would you not give more if you can afford to give more? We frequently make up strange logic (cognitive dissonance) in our head and using that logic we try to justify that Zakat does not apply to us. These self made theories are utter bullshit. Today we might be the one in a position to give Zakat. Tomorrow, we can easily be the ones who would need the assistance.
Now, let me come to the issue of “Income Tax”. Less than 2% of the population pays taxes in Bangladesh. Income tax to GDP is probably one of the lowest in the world. This is pathetic. Why are we not paying our taxes? Firstly, we are not paying taxes because we are greedy. Secondly, we say that the government is corrupt and whatever money we are pay as taxes will go to their pockets. When I thought about the latter argument I found that this has no logical basis. If we can give vote to the two major parties we cannot say that they are corrupt and hence evade/avoid taxes. Also, we are using all the facilities that the state is providing using the money given by actual tax payers. We are using the roads, the street light, the public parks, enjoying the subsidies that government provides and what not.
Let us stop feeding ourselves all these lies just because we have become materialistic and greedy. Let us give the Zakat properly and if possible more than 2.5%. Let us pay our taxes properly and then fight for our right to information and transparency. We are accountable for our responsibilities as citizens and government is accountable for their parts. Allah would not make us responsible for the corruption done by the government but would definitely make us responsible if we are enjoying the benefits of taxation but not paying our taxes. In the worst case scenario, if you are adamant that you would not pay taxes then at least calculate your taxes and give that to people directly as charity. Once we are fulfilling our responsibilities let us go to our family and relative and ask them whether they are giving Zakat and paying taxes properly.
Monday, July 18, 2011
The article with no title (Part 1)
I sometimes wonder how my life would have turned out if I was born in a different family, maybe a less privileged one. When I was small, my family went through severe financial constraints but despite everything my father was adamant that I study in an English Medium school. During middle school I was borderline autistic because despite my attempts I pretty much understood nothing in class. Just before the exams my father and mother used to write down answers (while I sat beside them crying my eyes out) to the problems which I sort of crammed in my head.
Let me now fast forward to 2004. I came out of the IBA admission test exam dejected because I knew I sucked. My father was waiting outside. When I told him that I had a horrible exam the only thing he told me “ kono bepar na, tumi NSU te bhorti hoye jao”. I did however pass that written test only to get kicked out after the Interview.
What if I did not get all this support? What if my family could not afford the tuition for NSU? I am pretty sure I would not have been in the position I am in now. Maybe I would have turned into a Sweden Aslam or a Porimol. The third part of a video called Zeitgeist explains that the way a person is brought up by his family has immense impact on what he becomes. Of course there are outliers and criminals are born in good families as well. But outliers are well, “outliers”.
However, when we consider or judge a person we do not take these factors into account. In fact, I am inclined to believe that the whole societal value system is a complete farce. These days the person with the most expensive car, best looking girlfriend/boyfriend, or richest father is automatically treated with the most respect. People look at them as their role models and want to be like them.
Society fails to acknowledge the unsung heroes which are making huge impact in the lives of people. I started reading a book called “The Black Swan” by Nicholas Nasim Taleb. He wrote about a fictional person who made a legislation that imposed locks on cockpit doors. This helped avoid the 9/11 attacks (since the locks prevented the attacks) at high cost to the airlines. Since his measures squandered public resources the public with the help of airline pilots kicked him out of office. He thus retired depressed with a great sense of failure. Ultimately he died with the impression of doing nothing useful.
This is probably a very extreme story but similar stories are there in real life. I personally know two people (not my parents) who never said “no” when someone needed help. They went so out of their way to help other people that they could never concentrate on their own life. Both are sort of considered unsuccessful by the people they helped numerous times.
There is a wonderful film related to this topic called “It’s a wonderful life” which I recommend everyone to watch. The main character tried to save his town from the clutches of an evil banker but ultimately failed. He became so poor that he could not feed his family and ultimately decided to suicide. At that moment an angel came down and saved him and showed him how much he has impacted the lives of people around him. Even very small things he did had helped save lives.
So, if you are amongst the people, who believe in good deeds and believe in Allah, then have faith and keep doing what you are doing. Regardless of your social status, wealth or appreciation by people, you are definitely in the right path.
Let me conclude by saying that I really do not have a conclusion planned. Maybe after a few days something will come to my mind and I will just edit the last part (thanks to all these options).
Let me now fast forward to 2004. I came out of the IBA admission test exam dejected because I knew I sucked. My father was waiting outside. When I told him that I had a horrible exam the only thing he told me “ kono bepar na, tumi NSU te bhorti hoye jao”. I did however pass that written test only to get kicked out after the Interview.
What if I did not get all this support? What if my family could not afford the tuition for NSU? I am pretty sure I would not have been in the position I am in now. Maybe I would have turned into a Sweden Aslam or a Porimol. The third part of a video called Zeitgeist explains that the way a person is brought up by his family has immense impact on what he becomes. Of course there are outliers and criminals are born in good families as well. But outliers are well, “outliers”.
However, when we consider or judge a person we do not take these factors into account. In fact, I am inclined to believe that the whole societal value system is a complete farce. These days the person with the most expensive car, best looking girlfriend/boyfriend, or richest father is automatically treated with the most respect. People look at them as their role models and want to be like them.
Society fails to acknowledge the unsung heroes which are making huge impact in the lives of people. I started reading a book called “The Black Swan” by Nicholas Nasim Taleb. He wrote about a fictional person who made a legislation that imposed locks on cockpit doors. This helped avoid the 9/11 attacks (since the locks prevented the attacks) at high cost to the airlines. Since his measures squandered public resources the public with the help of airline pilots kicked him out of office. He thus retired depressed with a great sense of failure. Ultimately he died with the impression of doing nothing useful.
This is probably a very extreme story but similar stories are there in real life. I personally know two people (not my parents) who never said “no” when someone needed help. They went so out of their way to help other people that they could never concentrate on their own life. Both are sort of considered unsuccessful by the people they helped numerous times.
There is a wonderful film related to this topic called “It’s a wonderful life” which I recommend everyone to watch. The main character tried to save his town from the clutches of an evil banker but ultimately failed. He became so poor that he could not feed his family and ultimately decided to suicide. At that moment an angel came down and saved him and showed him how much he has impacted the lives of people around him. Even very small things he did had helped save lives.
So, if you are amongst the people, who believe in good deeds and believe in Allah, then have faith and keep doing what you are doing. Regardless of your social status, wealth or appreciation by people, you are definitely in the right path.
Let me conclude by saying that I really do not have a conclusion planned. Maybe after a few days something will come to my mind and I will just edit the last part (thanks to all these options).
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