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Tuesday, August 25, 2015

Are You waiting for "Green Shoots"

Dear Investor,

Yesterday the stock markets across the world fell 5-6%.For many it was the biggest single day fall in a decade or so.
On social media the picture of the big bull in front of NYSE lying on its side(apparantly shallow breathing)are trending!!
All the 'talking heads' on TV who till saturday felt unthreatened are all talking of the world going into recession.

You,the investor,what are you thinking?Will markets fall further and should you exit your portfolio which is in loss at present and wait for lower levels to buy back?Can one ever understand how far the markets will fall or rise?

Or are you waiting to see the 'green shoots' emerge before committing?

Believe me that by the time the 'green shoots' are visible the market would already have moved up.Unless you are so risk averse,in which case you should be adding to your Bank fixed deposit,this right now is to get in.

Get in.Not commit fully.The Current Account deficit(CAD) is under control,the Rupee looks not too worried,crude is below $40.

Yes China's trillions $ economy is a cause for worry.Yes Eurozone is having economic and immigration issues.Geo political tensions,terrorism,El Nino all loom on the horizon.

The business cycle will change in the next 2-3 quarters.Depreciated rupee will help exports - ITES,food items.

Be prepared to see the stocks you buy today or tomorrow fall another 10-15%,even 20%.Add more.Believe that World growth might come down from projected 3.3% to 3% but that would still be much above the recessionary zone of 2-2.5%.

The time to BUY & HOLD is upon us.

Tuesday, August 11, 2015

Era Of 'Free Money' Drawing To A Close

Between September to December 2015,an epoch will come to an end.Started by the US Federal Reserve and Alan Greenspan's post 9/11 attempt to lift the economy and then the subprime crisis that hit the US harder than any cyclone,the printing presses of the Fed will most likely come to a halt.

Rates will inch up.Fourteen years is a long time to print money to boost the economy.Those who were for it and those against both have some positives to draw from this era.

However this is not the end of such measures.Central Bankers of Japan and China have taken over the baton as they attempt to keep their respective systems buzzing.Europe looks undecided.Temporarily stocks,real estate will benefit.


"You can fool all of the people some of the time. Some of the people all of the time. And most of the people once in a while. You can obstruct price discovery and you can disguise and distort the real value of things. But Mr. Market will get even some day. He always does."
Bill Bonner

The Commodity bubble built over the decades is winding down.For countries like India that import 80% of their energy requirements its a heavensent.For Russia,Venezuela,Nigeria and the middle east its a worrisome factor.

China is at an uncertain period in its economy that ran a sprint for over one and a half decade.Soft landing.Withering of its manufacturing behemoth?Stock price bubbles finally catching up(as predicted by yours truly for past One Year!!).

Yet.
Too early to write an epitaph.The spread of terrorism,the nucleur deal with Iran,the continuing uncertainty over Greece.

Domestically the frozen Parliament and deferment of GST and Land Bill delays our recovery.The Government focus on non core issues - beef ban,moral policing,is not adding anything to aid the much touted 'Make in India'The Industrial Production figures look too good to be true at times.

On the ground except for high flying PE deals which look crassly overvalued,as I write a local firm that sells Indian-chinese dim sum called WOW MOMO has been valued at 100 Crores....?There is a real bubble in these ecomm firms and I hope we dont have a deluge of housing.com kind of stories...!!

The real economy is not seeing any pickup in investments,agriculture still monsoon dependent,infrastructure poor.The strength of the Indian Rupee versus the $ has been an exception and when the Janet Yellen raises rates it will hopefully not lead to a too severe repercussion in indian markets.

Even if India grows at 5-6% we will still be better than most of the other countries.The long term holds out a lot of hope.