Thought for the day
“A man who wants to lead the orchestra must turn his back on the crowd.”
--Max Lucado (American, 1955 - )
Word for the day
Philately (n)
The collecting of stamps and other postal matter as a hobby or an investment
(Source: Dictionary.com)
Teaser for the day
Are political parties waiting for Supreme Court to fix age of retirement for politicians?
In search of new leadership
Usually all new bull markets begin with new leadership with
leaders of previous bull markets taking a back seat.
For example, late 1980’s bull market was led by commodities
like cement, steel and energy. Then commodities had a bad decade in 1990s. Late
1990’s bull market was driven by new economy businesses like IT, media and
communication. For next many years most of these businesses did not do well.
Last bull market (2003-2007) was driven by credit and investment theme. Large
projects (power, roads, ports, real estate development etc.) their financiers,
developers, builders, equipment suppliers and service providers led the charge.
The subsequent years have seen decimation of these businesses.
The interesting part is that in most cases financials have
travelled the complete boom and bust cycle.
The challenge before us is to hazard a guess which sector or
businesses will lead the next bull charge. In my view, it is as difficult a
task as it could be. Nonetheless, we must form an opinion, seek conviction for
the opinion, and make a strategy congruent to the opinion.
I would like to begin the process with setting the
assumptions and deducing what may likely not do well.
Assumption for the next bull market
1.
A stable government is formed post May 2014
election results.
2.
The new government follows the classical
Keynesian method to revive economic growth. Both fiscal and monetary stimuli
are provided to spur consumption and investment demand. Monetary policy is not
further tightened.
3.
Government raises substantial resources through
aggressive assets’ sale to recapitalize struggling public sector banks.
4.
Key fiscal reforms like GST and DTC are
implemented in next couple of years.
5.
Global economy continues to improve led by G-3
(US, EU and Japan).
6.
No disruption is caused by slower growth in
China and weaker Yuan.
7.
No major geo-political event occurs that would
create supply disruption in energy market.
8.
US Fed achieves the QE tapering target driven by
consistent improvement in housing and job market.
9.
US rate hike anticipation drive the risk asset
prices higher as safe haven US treasuries fall and USD strengthens.
10.
Commodity prices, especially energy, do not
spike materially from current levels.
…to continue
tomorrow
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