"Whoever hears of fat
men heading a riot, or herding together in turbulent mobs? No - no, your lean,
hungry men who are continually worrying society, and setting the whole
community by the ears."
—Washington Irving
(American, 1783-1859)
Word for the day
Zenith (n)
A highest point or state;
culmination.
Malice towards none
Why minority schools be
exempted from RTE provisions?
Why can't they be told to
admit 25% poor students from their respective minority community?
First random thought this morning
My colleagues just returned from an extensive tour of Uttar
Pradesh. The State is already into election mode; though elections are due only
in Mar'17.
At present the main contest appears to be between the traditional
rivals SP & BSP, with SP having marginal edge. BJP is a distant third,
nowhere close to its Lok Sabha performance. Congress does not appear in the
frame.
People are generally not hopeful of a Bihar like grand alliance.
Though many old Congressmen believe that Congress may finally court Mayawati to
claim a Bihar like victory.
World is not ending this weekend
"You must liquidate your entire portfolio and raise
cash", advised a well-wisher, last evening. "I did it today", he
said in a rather assuring tone.
"Ain't it time to buy", I asked curiously.
"No, I heard an expert on television. He says, we are in a
bear market. Our markets are going to fall substantially from the current
levels. The global scenario is very bad. It is much worse than 2008. You
yourself wrote yesterday, that global investors are expecting a deeper
recession and prolonged deflationary conditions", he explained with a grim
face but very confident voice.
"But what has changed in past three months. You sounded
extremely bullish around Diwali", I extended the conversation.
"No, no, no. You do not understand. Oil has plunged to almost
US$25/bbl. Over US$500bn debt is seriously under threat. Many European banks
are about to go bankrupt. Chinese reserves are eroding fast. There is great
rush towards safe haven bonds and gold. Smart investors have already seen black
swans", he spoke calmly, as if he was reading some research report from
top Wall Street bank.
"Ain't oil at US$25/bbl is a dream come true for India.
Except for ONGC and Cairn, everyone else seems to be benefitting from it. Even
RIL recorded over US$11/bbl refining margin in last quarter. How did
bankruptcies of General Motors, Lehman, Fanny & Freddie, Country First,
Bear & Sterns and sale of Merril Lynch, default of Greece etc., affected
our domestic economy in 2008-09. Negative yields worldwide may in fact be a
great opportunity for capital starved Indian enterprise and government to raise
cheaper money. Erosion in Chinese and OPEC reserves may actually turn terms of
trade in favor of India. Indian businesses have struggled with adverse terms of
trade with these nations for long", I tried to communicate my arguments to
seemingly uninterested ears.
"You do not understand markets. When bear strike, bulls go
hiding. In these times, for a common investor it is best to move to fringes and
stay there till the bulls come back from hiatus", he almost scolded me.
"But when did the bears actually strike in Indian market. Was
not it in summer of 2015 when we fell 15% from the March highs. 2015 was in
fact one of the few times in past 30yrs when Indian markets have given negative
return. So why did you not sell earlier. Why only now", I poked him,
risking a contempt charge.
"Do what you want to", he said in a voice of resignation
and put the phone down.
I had been worried about markets since May 2014 when it rallied
purely on "Hope". That "Hope" has clearly faded, with Nifty
below the Modi victory day. However, someone must account for the good work
that has been done since then. I strongly believe that world is not about to
end this weekend. But who cares for my belief.
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