Thought for the day
” Deprived of meaningful work, men
and women lose their reason for existence; they go stark, raving mad.”
-
Fyodor Dostoevsky (Russian, 1821-1881)
Word for the day
Facsimile (n)
An exact copy, as of a book, painting, or manuscript.
(Source:
Dictionary.com)
Teaser for the day
Is it right time for the Congress Party to transform into a
federation of regional parties (Each state with its own Congress) versus a
unified central command?.
Put money on the table
Investment strategy, like any other, requires clear definition of
goals and timeline for achieving those goals. The goals need to be defined
considering the likely challenges on the way to achieving such goals. Defining
goals which are subject to even foreseeable eventualities would make strategy a
sub-standard piece of mere academic interest.
For example, an investment strategy which defines its goal as
"to achieve 50% return over next three years subject to geo-political
concern in middle east, recurrence of financial crisis in peripheral Europe,
slow down in Chinese economy, spurt in global commodity prices, and failure of
government in managing consumer inflation and therefore persistent high
interest rates, etc." has little meaning
In my view, none of these eventualities would qualify as an
black swan event notwithstanding the severity of their occurrence. In fact, as
I write this morning, I find that all these absolutely are within the realm of
possibilities and may occur during next three years.
An effective investment strategy needs to account for all these
and define the goals accordingly.
Insofar as my investment strategy is concerned - it may be
explained in two sentences.
(a) Indian equities
are in an uptrend that will last longer than any previous bull market. So I put
my money on table.
(b) Over next five years
my portfolio should give returns 10% higher than the nominal GDP growth
recorded during that period.
This strategy accounts for all likely eventualities, including
(i) Rate hike by US
Federal Reserve in winter of 2015,
(ii) Fresh cold war
between US and Russia intensifying further with decibel rising to all time high
level before 2016 presidential elections.
(iii) Frequent
skirmishes in Middle East, and Pak-Afghanistan region as local forces compete
with each other to capture the space vacated by US/NATO forces.
(iv) China and Germany
escalating effort to enhance their area of influence over global economy and
strategic affairs. Remember the first world war broke out exactly 100years ago
on 28th July 1914.
(v) Inflation and
rates persisting around current level for another year at least before showing
a marginal tendency to come down.
(vI) INR weakening
gradually from current level and therefore the imported inflation continuing to
bother policy makers and consumers alike.
To reiterate, in my view, Indian equity market is now meeting
most conditions required for a sustainable bull market. I shall deal with some
of these in next few days.
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