einstein-his genius & its use for stock markets!

Imagination is more powerful than knowledge!

this simple statement has relevance for all walks of life. and also for stock markets!

only people who have this rare quality could envision Sensex in India touching 21000 by 2008 from a level of 3000 in 2003. not knowledge. not degrees. not phd's. not fancy titles like C.E.O.,C.O.O. etc.. but imagination was required to see this massive wealth creation.
i have to admit that i did not in my wildest dreams see Sensex touching these high levels.

even the massive success of Reliance group can be attributed to the superb imagination of dhirubhai ambani.

is this the bull market & the biggest ?

equity markets across the world have recorded recent high double digit gains across the world.

first let us answer this question-will the mar2009 lows be touched again? my question is -will lehman brothers,bear stern go bust in near future again?the answer to this one is simple- no this won't happen again in near future.and hence the answer to the frst question aso seems to be no.

the fall in equity markets has been one of the most severe over past 70 years-bettered only by the great depression of 1929.

hence the new bull market too should be one of the biggest.

When will the present global economic crisis end?

We seem to have hit a bottom in the present global slowdown. Things should improve from here. The fact that has made the present crisis very severe –the bursting of global real estate bubble- will make the recovery very sharp. Why? Because the deflated housing assets do have some intrinsic value & they satisfy a very genuine need of housing. Unlike the previous bust led by the bursting of dot com bubble in 2000- where most of the internet ,dot com companies were worthless- here that is not the case. And hence the inference of swift & fast V-shaped recovery in global economy.
Hence I am willing to stick my neck out and predict a full blown recovery of global economy by end of 2009. so now is the time to invest in assets like equities & make a fortune.

FEAR & GREED

FEAR & GREED
SUPPLY & DEMAND
ILLIQUIDITY & LIQUIDITY

Fear = Illiquidity = Supply of assets for sale

Greed = Liquidity = Demand
These equations explain what has been happening in the world of business from time immemorial. This what explains the recent about 20% increase in global stock indices. Though there has been some marginal decrease in the decline of global economy, particularly U.S. economy, the upside in the indices is explained by the increasing stock prices making the people just a bit greedy and hence the consequent increase in liquidity.

Satyam fiasco !

Satyam case besides being the case of extreme fraud, is an illustration of the Warren Buffett saying that a rising tide lifts all. It is when the tide runs out, you come to know who was swimming naked. As long as the real estate prices were rising globally as well as in India, Ramaligam Raju of Satyam was able to continue with his fraud and siphoning of funds from IT to real estate was taking place smoothly .
If the real estate bubble had continued to expand, the very same share holders who hauled him over burning coals, would have applauded him for his vision & audacity for buying the sister real estate cos. of Satyam.
But as is the case in such scenarios, what goes up has to come down. Hence the fall in real estate prices globally as well as in India leading to unraveling of the Satyam scam. When the buying of real estate cos. was declared, nobody saw any sense in it as every Tom, Dick & Harry knew that the real estate market had collapsed.
And as is said rightly the cat was out of the bag with the announcement of buying of sister real estate cos..

Demand & Supply- two words which explain almost eveything!

Demand & supply:
The most important words in economics which explain the irrational rise in price of assets, commodities etc. – the rise in price of crude oil from $10/ barrel in 2000 to $147 / barrel in 2008 – is partly due to increased demand. Even the irrational increase in equity prices in bull market is a case of demand being much more than the supply of shares- the buyers outnumber the sellers -a classic sellers market and hence weeds get sold as flowers2006-2007. And in the bear market, it is the vice versa- the sellers outnumber the buyers and hence the supply of shares is much more than the demand. The result- dramatic fall in prices. A classic buyers market- and hence flowers are being sold at the prices of weeds as in 2008.