By SHABBIR H. KAZMI
Jan 31 - Feb 06, 2000
Ibrahim Masud is the Head of Research at Khadim Ali Shah Bukhari &
Company (KASB). He completed his MBA from Institute of Business Administration (IBA),
Karachi in 1994. Before joining KASB, he had worked for some of the prestigious securities
companies. These include International Asset Management Company, Rana Investment Company,
Saudi Arabia, Credit Agricole Indosuez W. I. Carr Securities, Pakistan, and Forex Links
PAGE: What is your philosophy?
Ibrahim: "Good is that which man desires to be universal
law". This is perhaps the most valid definition of good, attributed to Immanuel Kant.
This possibly sums up my personal philosophy in life as well. In line with this strong
belief about the nature of good, sharing our gifts becomes the next step. Also, it is
important to look within rather than without for motivation the healthiest
competition is with one's own self. Competing with others tends to limit growth to the
level of our competition, while growth is unlimited in competition with oneself.
PAGE: How do you relate this with real life working?
Ibrahim: Aside from medicine as a profession, it is difficult to
think of a more rewarding profession than investment management for providing satisfaction
while believing in what I just said. On a grand scale, I have the satisfaction of helping
investment funds find their way to the most rewarding avenues, which leads to increased
wealth in the economy. There is also the satisfaction of helping investors make the most
of their investments. In the long run, credible investment advice helps in promoting a
culture that promotes honest, dedicated entrepreneurs and discourages the opposite.
Admitted that my contribution is minuscule in this grand design, but it is nevertheless
PAGE: How do you react when it backfires?
Ibrahim: Recent events in our national history would suggest that a
'Gold' version of Murphy's Law is more apt, which would probably read 'what ever cannot go
wrong, will go wrong'. Hence it is impossible not to have things go horribly wrong at one
time or another. However, it is useless to lose heart in such circumstances. Every crisis
is a concealed opportunity, if for nothing else then to at least learn for the future. I
try to assess if I have made any mistakes in my advice, or overlooked any risk factors
that should have been identified. Hence I look to improve the quality of my professional
capabilities in a crisis.
Further, I make a serious effort to try and highlight the failings
behind our recurrent problems, using all media at my disposal. I also try and advise
investors to maintain a conservative bias at all times, in order to limit the extent of
their losses in adverse market conditions.
PAGE: What is your perception of local and foreign investors?
Ibrahim: Investor behaviour is generally quite fascinating, be it
of local or foreign investors. Local investors sometimes exhibit strange reactions to
trying market conditions, booking profits at the first available opportunity and holding
on to shares while incurring debilitating losses. Domestic investors also do not plan
their investments, normally having a very large proportion either in equities or fixed
income securities. Hence they tend to earn very erratic returns, which sometimes
discourages them from continuing to invest.
Foreign investors on the other hand normally like to follow a logical
investment decision-making process, starting with a broad allocation between various asset
classes and regions. Their investment horizon is normally longer, and they look to earning
above average returns on the back of economic recoveries or improving economic conditions.
Hence their investment strategy has a much better chance of being successful by virtue of
the fact that they take calculated risks on the back of their forecasts about the economy.
Another interesting aspect of investor behaviour is actual biases that
exist in favour of certain stocks. More often that not, the results are disastrous. Not
only that, investors holding on to their 'favourites', find themselves short of investable
funds at the opportune time the best example recently was when the market was below
800, and has since recovered dramatically to post 78 per cent gains over the last 12
months. Such opportunities improve long-term returns for regular investors, and missing
out on such opportunities eliminates any chances of earning decent returns.
PAGE: What is your message to our readers?
Ibrahim: A recent seminar in Lahore about the impact of the global
economy on Pakistan was an eye opener. It was fascinating to hear business representatives
talk about the need for tariffs, subsidies, and various other forms of protection. This is
the age of competition we can only move forward as a nation if we learn to compete.
No country in the world has developed on the back of external 'assistance'. Pakistan can
only achieve its true potential if we believe as a nation that there is life beyond
protected markets. Looking at the individual achievements of many Pakistanis in different
fields internationally, there is no reason why the country cannot, and should not grow and