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Wednesday, November 23, 2011

The Chaos Theory

I have become a believer....


Just when it looked that the US was not going into recession,PIIGS were on the verge of getting over their sovereign debt issues,BRICS han tould keep growing quicker the developed world,the Arab Spring would breed more democracies,comes a throwback......

Again issues in Spain,Italy,subdued outlook in the US,another Tahrir Square,the slowing growth in China and an upcoming stagflationary situation in India.The Chaos Theory states that the complexities of different factors makes a longterm prediction almost impossible.

The lack of political will to undertake reforms from a Government that has a majority is not only puzzling but downright asinine.Have we frittered away the chance to make this country a dream destination?A leader of the emerging world?Only hindsight will provide an answer.

This time at least the sum of the parts seems to be not greater than the whole!

The answer is to keep the faith and keep investing......SiPs(systematic Investment Plans),every month and month on month to gain the advantage of TPoA(power of averaging).It allows you to keep your exposure to risky assets low as well as giving time for the markets to adjust to the vicissitudes of market dynamics.

Like the weather,the equity markets are a 'natural system'and its difficult to quantify,determine and factor in all the happenings-be they political,economic or natural phenomena.Anyone who thinks they have built a system that can read the differentials and come out with a single answer is welcome to try it on me!!

Till then believe in your instincts,invest in companies that have scalability and grounds for growth,an honest management that has at least one Leader(mind you i did not say MANAGER).

This blog has not talked of individual stocks for a long time and the time comes in Indian equities when sectors and companies can be identified and I look forward to doing that...in my own way!