Making profitable investment perhaps did never sound so
complicated and complex as it does today. A plethora of often contradictory
data emanating from diverse sources on hourly basis seems to be confounding
even sophisticated investors.
The raging debate over implications of continuing with or
withdrawal from the ‘tiger ride’ called quantitative easing (QE); consumption
squeeze due to European austerity and US sequester; proverbial great rotation
from bonds to equity; gold vs. risk assets; developed markets vs. emerging
markets; credibility of Chinese growth data and its sustainability; will
Abenomics succeed in bring Japan out of economic abyss; how will the new normal
slower growth period impact the “commodities’ world” especially Australia,
Canada, Russia and host of developing LatAm and African economies; and above
all are we heading to a massive currency crisis much bigger than mid 1990’s, is
keeping investors perplexed.
Adding to the intrigue is the geo-political tensions brewing in
middle-east, Korean peninsula, Chinese sea, Afghanistan, Iran; and civil unrest
brewing in Europe, China & some Latin American nations.
In our domestic context many factors, including but not limited
to, like poor governance (both corporate and political); low historical returns
and collapsing new employment opportunities, persistent high inflation etc. are
keeping domestic household savings away from equity markets.
The professional investors are also wondering whether the 8%+
growth period of 2004-2008 was an aberration in more attainable growth trend of
~6% and therefore they should be reworking their investment strategies away
from growth to consumption and scale down their return expectations.
In this milieu, in our view, the only way to make profitable
investment is to keep things simple. We feel where economic fails (as certainly
is the case at present) we must look at philosophy for solutions. Which means
it is better to get back to old traditional school of investment.
In the coming days we shall be presenting a highly simplistic
view of various investment considerations like economic growth trends,
inflation, rates, currency, global liquidity conditions, corporate
fundamentals, equities’ market and political uncertainty etc. that in our view
might help provide some direction to household investors in structuring or
restructuring their asset allocation.
It is a common saying that keeping things simple is often most
complicated thing in life. From our empirical study and anecdotal experience we
have concluded that more often than not keeping things simple works best in
making profitable investments.
We shall commence third phase of our ‘Discover India’ tour with
a trip to southern states of Tamil Nadu and Andhra Pradesh next week and shall
also be covering the eastern states of Odisha, West Bengal and Bihar in this
phase.
Thought for the day
Massive inequality, we have learned, isn't the best way to run an economy after all. And when you think about it, it's also profoundly ugly.
Thomas Frank (1965 - )
Thomas Frank (1965 - )
Word of the day
Wonk (n):
A stupid, boring, or unattractive person.
A stupid, boring, or unattractive person.
(Source: Dictionary.com)
Shri Nārada Uvāca
Does L. K. Advani have better ‘secular’ credential than Narendra Modi? “Post Babari” history is in fact more bloody than “post Godhra” history.
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