Thought for the day
“Give thy thoughts no tongue.”
-
William Shakespeare (English, 1564-1616)
Word for the day
Ugsome (adj)
Horrid; loathsome.
(Source: Dictionary.com)
Teaser for the day
From “Solid BRIC” to “Fragile Five” – India has traveled
long distance (to south) in last one decade.
Cognitive dissonance
In past one week, I dialed 30 numbers selected randomly from my
professional phone book. Given the conflicting signals coming out of markets, I
just wanted to assess the mood of the market. The people I called were a boring
mix of investment managers, credit managers, corporate bankers, equity
analysts, economist, wealth managers, insurance brokers, some seasoned
investors and couple of corporate treasury managers. Each conversation lasted
10-25minutes.
I asked one simple question to all the people I had called –
“what are you most excited about and what is bothering you most at this point
in time?”
The responses were varied, mostly unclear, and reflected the
cognitive dissonance in the state of mind. May be my sample was faulty, but not
one soul appeared confident about the direction of markets and economy even for
next six months.
The key highlights of my impromptu conversation with market
experts could be listed follows:
(a)
Considering that the markets have been turbulent
for most of this week, all the people I called appeared surprisingly free and
interested in talking to me,. However, none was inclined to discuss financial
markets and investments. All sounded indifferent towards investments.
This in my experience usually occurs close to bottom of a deep
bear market. Sensex at all time high does not corroborate this.
(b)
There is an old saying in context of financial
markets – “in good times few market participants have time for gaining
knowledge; and in bad times few are inclined”. From my discussion it appeared
that not many people are bothering to go below headlines and beyond front
pages. Yet another sign of bad times.
(c)
An overwhelming 70% were most concerned about
political developments in the country and 80% were most excited about the
prospects of Narendra Modi becoming next prime minister.
This partially explains the higher Sensex levels. Probably 17%
single day rally of 18th May 2009 is still haunting people. At the
same time this also highlights the risk should for some reason Modi not reach
7RCR.
(d)
When specifically asked, opinion was vertically
divided on the threat of China hard landing. However, everyone agreed that
should this happen, Indian markets will sink into a deep bear phase.
(e)
14/30 were optimistic about the economic growth
recovering to 6% in 2HFY15. But conversely, 12 of these 14 believe that
interest rates may not come down in next 12months!.
(f)
“Exporters” was a consensus favorite theme. But
only 3 of 30 were concerned about the impact of slowdown in Latin America,
China, Russia, Australia, East and South East Asia on Indian exports.
(g)
17 of 30 believe that the USA will lead the next
global economic upturn. But 12 of these 17 believe that INR will appreciate to
55-57 range by March 2015.
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