Indian GDP was growing at a 8-9% p.a. growth rate 2009 onwards while the whole global economy was recovering from a recession. But then Subba Rao with his convoluted thinking decided to put an end to this growth for the benefit of the so called common man by raising interest rates for taming the inflation.
When a car is going at a steady speed & a good driver wants to slow it down, he takes his foot off the accelerator & mildly presses the brake pedal to slow it down. But S.R. like a drunk driver hard pressed the brake pedal as well as used the hand brake resulting in the car doing a wheelie & almost pointing in the opposite direction (read the rise in interest rates slowing GDP growth). In the process the brake & the hand brake, both, break down. Similarly S.R. has used the rising interest rates to derail the Indian economy in which he has succeeded but has failed to subdue the inflation suitably. S.R. has finished his armoury of raising interest rates & now trying to fool everybody, just like the driver whose car has lost both the brake & the hand brake, he is saying that he will not be using the brakes (read he will not be raising the interest rates further). But we know the brakes have failed & hence cannot be used. But unfortunately the damage to India’s growth has been done.
Another factor coming into play in this scenario is the inferiority complex of Indians. If the west has recession, then S.R. wants that too.
High GDP growth rate & inflation are two sides of the same coin. I think for a country like India with approx. 30% of population below poverty line, we should have HIGH GDP growth as the first priority.
Still keep your faith in equities & keep on buying well run, high growth cos.. u will make good money over the next three years.
Saturday, November 12, 2011
Sunday, October 16, 2011
Blame it on S.R.!!
India’s GDP growth for Aprl-June 2011 qtr. falls by 50% to 5%. As I have repeatedly pointed out that RBI governor with his ludicrous & anti growth, interest rate increasing stance has brought the growth of Indian economy down to its knees. And then they have the audacity of blaming the global turmoil for this slowdown. No way. The credit for this blunder goes to Subba Rao & S.R. alone. They have set their house on fire ( read slowed Indian economic growth ) & are now have the audacity of trying to blame a fire that is burning a hundred miles away( read slowdown in europe, USA). Developing economies –BRICS (Brazil, Russia, india, China etc)-are like growing kids in their teens who need huge quantity of food etc. but rather than increasing the supply, the RBI & govt. at the centre, by increasing the interest rates are giving bitter medicine to this growing kid ( read increasing interest rates to make finance costly....) with the hope that his appetite will decrease thus decreasing the demand. We did read such a story- is it Nicholas Nicholby?- as kids. In a recent candid interview the Chairman of SBI Bank admitted that there was nil demand for loans for new Greenfield projects from banks's customers. Yes you read it right, nil demand. And we know who is to be credited for this tragic achievement. But not all the central bank governors are being myopic. Brazil is a fast growing economy like India with a problem of inflation too ( inflation at a six year high in Brazil) & its Central bank reduced the interest rates recently there recognising the fact that the global economy is not yet out of woods & growth wherever it is, is precious & should be encouraged. He candidly agreed that monetary policy have effect with a lag – at least a year & who knows what the global economy will be one year from now? Pay heed S.R. to this!!!
Friday, July 22, 2011
Follow the story !!!^^^:)^^^
This is one of the most important principles of investing. I have invested in many cos. –Hindustan Zinc at the price of Rs. 1.4 in 2003, present market price 142 (adjusted for splits); UTI bank(now Axis bank) at Rs32 present market price Rs 1297. But yours truly bought these stocks early & sold them early. There are opportunities galore there to invest in the right co.. And as long as the story is good, stay invested. But as most things in life this is easy to say in theory but very difficult to do in practice. Even for full time professionals it is very difficult to stay invested or increase their investment when the indices have fallen by 30-40% & your portfolio has fallen by 50%. But then the stellar return-I have illustrated above - you get by staying invested does make bearing this pain worthwhile.
To be able to do this in practice you do need the advice of a professional like me.
To be able to do this in practice you do need the advice of a professional like me.
Sunday, May 8, 2011
all that glitters is not gold-increase in gold,silver prices is a bubble!!!:)
Gold, Silver prices in bubble stage!
As Warren Buffett very lucidly put in his inimitable style that all the gold produced in the world so far can be put in a cube of a side of 64 feet. This cube of 64 feet has gold who’s value as on date is of 1/3 of U.S. economy. Now as a rational investor would you own 1/3 of Exxon mobil, Goggle, G.E. & other blue chip cos. Or you would own the gold in this 64 feet cube. To allow you to make a better choice, which though is very easy commonsensical ( but isn’t common sense the rarest sense!), please consider these facts:
The businesses mentioned have growth in their sales & earnings on their side so that their valuation may increase further in future.
During most of the 17 century, aluminium was more costly than gold! So you never know when the investor fancy will change.
So sticking my neck out again, I think that gold, silver may collapse from these levels or may increase by another 20-30% & then fall by around 50-60%! So we are in for interesting times.
As Warren Buffett very lucidly put in his inimitable style that all the gold produced in the world so far can be put in a cube of a side of 64 feet. This cube of 64 feet has gold who’s value as on date is of 1/3 of U.S. economy. Now as a rational investor would you own 1/3 of Exxon mobil, Goggle, G.E. & other blue chip cos. Or you would own the gold in this 64 feet cube. To allow you to make a better choice, which though is very easy commonsensical ( but isn’t common sense the rarest sense!), please consider these facts:
The businesses mentioned have growth in their sales & earnings on their side so that their valuation may increase further in future.
During most of the 17 century, aluminium was more costly than gold! So you never know when the investor fancy will change.
So sticking my neck out again, I think that gold, silver may collapse from these levels or may increase by another 20-30% & then fall by around 50-60%! So we are in for interesting times.
Tuesday, March 22, 2011
Intrinsic Value
A very warm welcome to Mr. Warren Buffett – my guru & the richest person in the world. Above all a living legendm, a great philnthropist & above all a great human being – on his maiden visit to India.
Today we touch on one of the most important concepts -which forms the cornerstone of Mr. Warren Buffett investment philosphy
Intrinsic Value
Very important concept. It is the Cornerstone of value investing.
Let us take the example of a House built. At any time it has an intrinsic value comprising of cost of land, material used, labor etc.. All these add up to form its Intrinsic Value.
Similarly for a business- its assets- plants, brand value, distributor network, customer loyalty, cash balance etc. add to make up the intrinsic value of a business- what exactly is the business worth?
To buy the shares of a business when they are selling for less than their Intrinsic Value is very important & is the right thing to do. When one is doing that one is investing. Otherwise one is speculating.
Today we touch on one of the most important concepts -which forms the cornerstone of Mr. Warren Buffett investment philosphy
Intrinsic Value
Very important concept. It is the Cornerstone of value investing.
Let us take the example of a House built. At any time it has an intrinsic value comprising of cost of land, material used, labor etc.. All these add up to form its Intrinsic Value.
Similarly for a business- its assets- plants, brand value, distributor network, customer loyalty, cash balance etc. add to make up the intrinsic value of a business- what exactly is the business worth?
To buy the shares of a business when they are selling for less than their Intrinsic Value is very important & is the right thing to do. When one is doing that one is investing. Otherwise one is speculating.
Tuesday, March 1, 2011
Bangkok diaries- Does the budget matter?
Bangkok diaries- Does the budget matter?
Hairat Mubark to all!!
Who remembers the pompous announcements made in last year budget? Who will remember the pompous announcements made in this year budget. No one. As a true congressman P.M.( Pranab M. & not the P.M.) knows that India progresses by the Grace of God & the hardwork of its citizens. So they just do nothing. That is what exactly he has done in this budget. Nothing.
Everybody knows that India was a economic superpower when native Americans roamed around U.S.A.. I was recently traveling around Thailand & the whole country ( not only cities like Bangkok, Pattay, Phuket but even plaves like Krabi is prosperous. By the way 1 baht =Rs1.6 & last time I traveled to Thailand it was 1 baht= Rs1.3). They don’t know what an ELECTRICITY CUT means. Roads are excellent. Shops -7 eleven are open 24 hours selling everything from liquor to candy. But now leave aside the developed world, we are decades behind even Thailand!
Why? One big reason is the attitude of the govt.. Outside India, govt. & its agencies exist to facilitate life of people. But in India the omnipotent sarkar is all the time working overtime to make life difficult for its citizens. Lrt us hope that this changes in future.
Hairat Mubark to all!!
Who remembers the pompous announcements made in last year budget? Who will remember the pompous announcements made in this year budget. No one. As a true congressman P.M.( Pranab M. & not the P.M.) knows that India progresses by the Grace of God & the hardwork of its citizens. So they just do nothing. That is what exactly he has done in this budget. Nothing.
Everybody knows that India was a economic superpower when native Americans roamed around U.S.A.. I was recently traveling around Thailand & the whole country ( not only cities like Bangkok, Pattay, Phuket but even plaves like Krabi is prosperous. By the way 1 baht =Rs1.6 & last time I traveled to Thailand it was 1 baht= Rs1.3). They don’t know what an ELECTRICITY CUT means. Roads are excellent. Shops -7 eleven are open 24 hours selling everything from liquor to candy. But now leave aside the developed world, we are decades behind even Thailand!
Why? One big reason is the attitude of the govt.. Outside India, govt. & its agencies exist to facilitate life of people. But in India the omnipotent sarkar is all the time working overtime to make life difficult for its citizens. Lrt us hope that this changes in future.
Sunday, January 9, 2011
Demand & supply
Demand & supply
This one of the most simple sounding concepts in Economics but it is a very important concept. As has been positively written about India and other BRIC countries, the increasing population and increasing wealth and size of middle class in India and other BRIC countries is leading to ever increasing demand for all sorts of products and services like cars, two wheelers, consumer durables, mobile telephony etc.. This means an ideal scenario of increasing sales and profits for most of the companies in India.
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 flowers 2006-2007. 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.
This one of the most simple sounding concepts in Economics but it is a very important concept. As has been positively written about India and other BRIC countries, the increasing population and increasing wealth and size of middle class in India and other BRIC countries is leading to ever increasing demand for all sorts of products and services like cars, two wheelers, consumer durables, mobile telephony etc.. This means an ideal scenario of increasing sales and profits for most of the companies in India.
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 flowers 2006-2007. 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.
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