Thought for the day
”Maids want nothing but husbands, and when they have them, they
want everything."
-
William Shakespeare (English, 1564-1616)
Word for the day
Plebeian
(adj)
Vulgar; common; crude or coarse in nature or manner.
(Source:
Dictionary.com)
Teaser for the day
TRS chief says "Will bury anyone who dares disrespect
Telangana"!
What could be worst disrespect to the motherland than
suggesting that it is capable of being disrespected by any tom dick harry?
Some books to finish and few places to visit
In past few days, I have outlined my thoughts on hurdles Indian
economy faces in achieving a sustainable 8%+ growth path.
Positively, many readers have appreciated that there is little
on the ground which could kick start the virtuous cycle of "higher income
- saving - consumption - investment - income" in near term.
Most also agree that morning star is now visible and signs of a
brilliant dawn are emerging on the horizon.
Some active participants in the equity markets have however
suggested that hurdles in achieving higher savings and investment rate should
not be deemed as "no profit making opportunity" in the market in near
term. I could nothing but agree with them. I receive plenty of "stupendous
trade" ideas every morning. Many of them actually go up 2-20% for several
days.
Every day morning I find a slew of companies which traded at
their all time high levels. Admittedly, I have never heard about 70% of these
companies. A preliminary enquiry shows a large number of these "multi
baggers" have little to show in their financial statements. Surprisingly,
their profits jump with investor's sentiments and ebb accordingly. Obviously I
am not at all excited about these "circuit hitters".
The tremendous response to some recent IPOs also reminds of exuberant
times seen during 1989-90, 1994, 1999, 2005-07.
But what is catching my attention is small bubbles on the
surface of services sector suggesting a strong undercurrent and high
temperature underneath. Retailers, e-commerce platform providers, logistic services,
pharma R&D, ITeS, telecom, entertainment, E&C contractors have all seen
their market value burgeoning exponentially. Many players in this space have
been able to raise risk capital at rather elevated valuations in recent past.
Though comparatively smaller in overall macroeconomic context, this space
appears to have decoupled and moving ahead alone.
I am a big fan of enterprise, innovation, large scale and ideas
that directly touch of people. However, I do not like to invest in businesses
(a) I fail to understand; (b) where visibility of positive cash flows is low;
or (c) where valuations are high just on hopes.
I would therefore be very selective in venturing in this space.
I guess I have enough time at my hand to make the selection. The nagging feeling
I get from conditions in Europe provides me comfort that soon there will be an
opportunity to buy at my will. I need stand in long queue at the upper circuit
freeze level to buy any stock.
This soon however may not be tomorrow morning or next week. But
that is fine with me. I have some books to finish and few places to visit. I
can therefore wait little longer without getting bored.
For those getting itchy I would suggest studying the market behavior during
July 2007 when subprime problem first hit the market and September 2008 when
Lehman actually collapsed. The yield curves across Europe are also depicting a
story.
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