Thursday, April 24, 2014

Creating Wealth...?

I have been reading the brilliantly lyrical Running Money by Andy Kessler,listening to Reshma sing 'Challa' while looking at the green and red ticks on the NSE-BSE terminal.

The First Derivative is Speed.The second derivative is acceleration.
- Andy Kessler

The mighty Economies of the west are a shadow of their ersatz glory.The Bengalurus and Mumbais are creating wealth.Moving away from the  barrier broker by the Industrial Revolution.When a Facebook's valuation is almost equivalent of the Top 5 Fortune 500 without a real product.

From huge machinery led fabrication units called factories to diode lasers and packet switches that help speed up the internet traffic and leading to the increasing networth of companies whyou have never heard of!

Is creating wealth in this century easy?Could I take my harley out for a spin across a continent or two a la Jim Rogers and find investment opportunities?Oil hunters in Russia?Or find a product to sell to C K Prahlad's 'bottom of the pyramind'who earn less than $4 an hour?

With expectations from the Indian markets high on new political equations,isn't it the time to ask ourselves where the next great investment opportunities will come from?An Indian Tobacco Co(ITC) that has 70% of its balance sheet revenue from things other than tobacco products!

Businesses have become complex organizations with different products.The analyst with Gann theory feels he has the best tools,the Fibonnaci nos man says the same.Some look at growth,others at Book Value,Debt,Credit nos,good managements,star CEOs....well enough theories to last seven lifetimes.Long term,short term.Buy only.Bull baiter and Bear beaters!!

Portfolio diversification experts and Mutual Fund backers.

Unless there is armageddon the expectation that in Life as well as in business,things keep growing.Index funds will give you a low cost option with a market lined return.I in all these years I have seen a gamut of strategies but the one critical fulcrum in this mix is the psychology of the Investor.Reason for loss in 90% of the case is chasing exceptional return.Penny stocks even for those investors who have a limited capacity for loss.

So with the Election coming to a conclusion on 16th May all those who have a view must keep a conservative approach as far as putting money where your mouth is!(I love these americanisms).With post inflation returns of 7-8% being fair....its important not to lose sight that you might make or lose money in the short term but Investing is a long term game...