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Tuesday, November 20, 2012

The Lion & Hyenas

Once in the Serengeti in Tanzania I came across a single Lion that had killed an impala.It was surrounded by five or six hyenas which mobbed and finally intimidated the Lion into relinquishing his kill.
 
Israel reminds me of that Lion,surrounded by hostile states of Syria,Jordan,Lebanon and Egypt as well as the stateless Palestinians.
 
There was a time when the experienced war machinery of Israel defended the Kibbutz and other expansions in the west bank and probably were the first to invent counter-terrorism,now offcourse almost all armies in the world have a counter-terror division either in intelligence or special forces.
 
All that Israeli expertise born out of their battle for independence after the British left Palestine in 1948,created a chaotic country - Jordan and left the jews at the mercy of 5 Arab armies.As if the holocaust and Hitler were not enough.Then on the holiest day in the Jewish calendar the Arabs again attacked in what is known as the Yom Kippur or Six Day War when the Israelis wrested the Golan Heights from the Syrians.
 
"Lo Kol-Kach Tov"-All is not well
 
Yet this time there is an exhaustion visible with israel and the amount of firepower used is giving good PR ops to Hamas and everyone else.Its no secret that the Arabs from Ayattolah Khomeini to Saddam Hussein used these people for their own political goals and that is continuing.On the other hand so many young Israelis after serving their mandatory term in IDF come to India to rest scarred psyches,battle wounds-physical and mental.Having spoken to many I sensed a disappointment with War,with the leaders who still persevere with a 'Cold War' mindset.
 
Living in India,in a pincer like state with an aggresssive China and belligerent Pakistan-I am an unabashed admirer of Isreal,its people,technology and sheer bloodymindedness.Yet the bombs are heading towards Tel Aviv.Next might be Ashkelon,Haifa.Jerusalem remains divided.
 
The repercussions of a strong Arab-wahhabi network and weak Isreal is not a positive sign for a liberal world as well as without any alternative to Oil a scenario where Arab states curtail production or in a worst case situation blockade the west would be net negative for economies already on the waterline of recession.The Al-Saud dynasty seems on its last legs and the Wahhabism patronised by them has become a veritable monster set to devour the longest rules state of Saudi Arabia.
 
It leaves western politico-leadership open to being arm twisted as seen in the Iran case.I am certain they will build a nuclear device while the US and UN plan sanctions,protests or armed intervention.After Afghanistan and Iraq the US does not have the heart to go it alone and general consensus looks improbable.Iran will do what North Korea and Pakistan did!
 
In addition to acreage shrinking for crops and no new tech to mine natural resources I am very bullish for the next decade on commodity prices moving up despite the measures taken by national governments.
 
 

Tuesday, November 6, 2012

Who Cares About The Longterm...?

Every analyst I have spoken to in the past couple of years has two views,one is for the short term and another for longterm.Depending on individuals the definition of 'long term' stretches anywhere from One year to a decade.
 
There is unanimity that if you hold your investments for the 'long term' you will always get a higher return on your investments.The truth is not always so simple!
 
Generally the value does go up in segments that are in demand or those having inflationary pressures.Gold,silver have responded to safe haven demands giving average returns of 20% YoY after stagnating in the 1980s-1990s.
 
Art on the ther having given phenomenal returns of 130% in the mid 2000s has been -19% since 2008.
 
An exception does not prove the Rule.It breaks a generalisation.
 
What I want to get at is the duration of holding your investment becomes important ONLY if you have picked the right one(or close to the right one!).No point holding something for 10 years if it just returns you the capital invested.
 
The guy from whom I buy fruits at the local bazaar on being queried on high prices for common fruits that used to cost pennies a couple of years back,asked me a very pertinent question,"Where is the land to grow fruits and vegetables when all available land is being taken over for apartments and offices?"
 
I keep saying that the inflation in India is supply side dynamics and its sticky simply because our infrastructure is unable to prevent wastage or better storage and we will not see it below 7.5% in the forseeable future whatever measure the Goverment takes.
 
Pay more attention to choosing the investment options than on leaving it.Audit them on a yearly basis(I would prefer to do it half yearly)and you need to spend time,get a financial services professional if you cannot give time.The bucks you earn should give you a decent return(10%+ in India) to stay ahead of the race and build a retirement corpus.
 
Those who dream of sipping a martini on a golden beach in Bali watching the sun go down need to get aggresive in managing their returns.Silver(MCX  58015) looks like surprising on the upside with demand from China and a taget of around 64000 in the next 6 months for those who like commodities.Finance and capital investments are required by  infra,capital goods,consumers at all times and the best conduit are the Banks.Banks with manageable NPAs and with scalable business models with presence in Tier-I&II cities stand the best chance.
 
But do ask yourself....how long is long term??