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Thursday, May 9, 2019

India:A Dance with Democracy or a Brush with Fascism?

The Political Game➥

The jamboree culminates on 23rd may 2019.On one side a diffused upper crust leadership battling hard to prove their relevance. The incumbent - brash,politically incorrect,banking on the faceless masses who feel a sudden uplift in their Hindu identity,wanting to brandish religion as a sword that gives votes.

Both sides are corrupt. It is only the degree to which the differential lies.I do not find any party having a coherent policy to create jobs,manufacturing,infrastructure so I am not very positive on post election outcomes.

If I was to predict I would say that the BJP would be back for another 5 year tenure but with allies.I am a bit wary if the high decibel media backed BJP campaign can overcome the rural angst and whether the village folk can be Harry Potterized into believing that another 5 years to this Government will let them achieve all the things they did not even come close to doing since 2014. 

Trump's Tweets➽

If ever the adage that "the pen is mightier than the sword" was true then Don Trump has brought it to fruition. A simple tweet and a few hundred billions get wiped off the market cap!All said and done he does have the Chinese over a barrel as they stand to lose more than the USA in this trade war.The trade deficit with China was approximately $ 470 billion in 2018 and the Chinese will be hard pressed to manage getting away without paying a penalty

Oil Falls➴

The precipitous fall in Oil from $75 to $60 although helpful for import dependent countries like India will be negated in the long run by Iran sanctions,Libyan war and Venezuela bankruptcy and a big fall is not expected.With the USA no longer dependent on outside supplies it can afford to utilize that advantage in political muscling of Iran

Our Markets🔺

On the risk to reward front I am a firm believer that traders should either wait out the event of sell short term holdings as I see a 5-7% upside if all goes as per expection but a steep 20-25% correction over a period of time if even the slightest unthinkable happens on the political front.

A succession of indicators - low auto sales,low GDP(even after window dressing),almost nil manufacturing growth added to the likelihood of another El Nino. India cannot afford a third successive uncertain monsoon.

The markets I think will surprise many investors as the volatility will last the entire year. I also feel that the Indian markets will give those who have the gumption to back themselves a massive opportunity in value buying in 2019.

Nasdaq and Dow🔀

The US markets have been super performers price wise over the last one year.This year will be sideways so do not be tempted into investing simply by looking at One to Three year returns.Do the research and if ever there was a time for value buying,it is now.

Getting stuck in good stocks at high prices is the surest way to average portfolio returns.Like every year this year too has its own unique challenges and many crocodiles lie in wait so tread the water carefully.

Monday, February 18, 2019

In Disturbed Times......Do Nothing

The past eight months have not been kind to the equity investor.In fact,one investor showed me returns from his SiP portfolio that he has been running for eighteen months and the returns are negative.

In times of turmoil,eighteen months or two years are but a blink in the eye for markets and it becomes puzzling for those who see no returns to start comparing with Bank Fixed Deposits where they would have still got 7%  pre tax.That mistake is called IMPATIENCE.It has a huge cost.

Churning the portfolio is easy when the investor pressurizes his advisor to show action.Warren Buffet said that investing is like watching paint dry.But does the modern everyday investor care?They want returns and they want 'em every day!!

Hold on.Take a deep breath.Better yet,avoid looking at your stocks or Mutual Funds or whatever.Take a walk,go for a vacation,anything but brood over the red ink dripping all over your well crafted portfolio.As the saying goes its in bad times that we know our friends.

The current situation with the unfortunate attack on CRPF in Kashmir and war talk and Trump in fighting and China trade wars and the mother of all Election battles in India is a fantastic time to build an all weather portfolio.Do not look at returns for the next six months but focus on picking stocks and deploying the Systematic Investment Plan methodology for direct equity as well.

Expect the fruit over the next two years and it will be high alpha.Oil will vacillate between $ 50-70 and commodities will remain depressed on China demand pessimism.

As the years pass I become more and more convinced that success in equity markets is determined more by our emotional quotient(EQ) rather than Intelligence quotient(IQ).Loosing patience,chasing overnight success stories that never fructify,hearsay,rumours.It is far better to invest in low quality stocks(with the caveat that they should be backed by actual business) and to hold on for the long term than to expect 10 baggers in a year!

Contrary to what many think this is the best time to invest.No one will stop eating or going for entertainment be there a war or not.Having a billion strong population helps with the consumerism.These are but small pointers to where you should look to find your next Multibagger.

Let your advisor be a relatioship manager and NOT a sales manager.