Saturday 21 November 2020

Risk can come from anywhere

In life, risk can come from anywhere. More so, in equity investing. This thought has been captured very well by the following quote :


Condoms aren’t completely safe. A friend of mine was wearing one and got hit by a bus. — Robert Rubin

Lakshmi Vilas Bank (LVB) has been in the news for poor functioning and an aborted attempt to merge with Indiabulls. That tells a lot about both. As Yogi Berra said "You can observe a lot by just watching".

On Nov 17th, RBI put LVB under moratorium and decided to merge the same with DBS India. Merging LVB with a strong entity like DBS would ensure safety of the depositors' money, I think. But what happens to the shareholders ? Read the following :



So, the entire equity capital of LVB stands written off and the shares are now worth zero. Didn't I tell you, that in life, risk can come from anywhere. And more so, in equity investing.