"If I could explain it
to the average person, I wouldn't have been worth the Nobel Prize."
— Richard P. Feynman
(American, 1918-1988)
Word for the day
Cunctator (n)
A procrastinator; delayer.
Malice towards none
After all is said and done,
India will not be Congress Mukt, as by the end BJP would have become more
Congress than the GoP itself.
The skeptics should watch
TMC which is more communist than the CPM.
First random thought this morning
The famous Mumbai Dabbawallahs have evoked global interest. The
British Royalty is impressed and so are management czars at elite Harvard
Business School. The alcohol supply chain in Gujarat also deserves a place in
the hall of fame for management wonders.
Regardless of the bitter rivalary between CM Nitish Kumar and PM
Narendra Modi, the bootleggers in Bihar must be learning a lot from their
Gujarati counterparts.
I'm not going anywhere, neither do markets
"Sell in May and go away", theme is playing well in
global equity markets. Global investors are on a frantic selling spree, as not
seen in past five years. Even though India, along with a couple of other
emerging market have not witnessed much selling from global investors, the
market is evidently worried.
In principle I dislike to be a contrarian. In my view, the natural
tendency of people is to be conformist. In financial markets' context, being
contrarian is mostly counterintuitive. In some cases it could be opportunistic,
but mostly it is found to be egotistic waywardness. Sometime people, usually
those who have recently made some exceptional gains, use this as indulgence at
the cost of a small pie of such gains.
I have studied many contrarian views and ideas and also examined
the success of these views and ideas in anteriority. There have been many
isolated cases of large gains being made through contrarian ideas/view. But
most contrarian investors who did not convert to conformism, soon after, have
usually perished.
Most successful legendary investors have conformed to the
classical investment theory. They have made money and left a rich legacy. The
contrarians have made and lost money, enjoyed ephemeral glory, and live only in
folklores.
In this backdrop, I would now like to answer the worries of my
readers.
(a) In past eight years
since the global financial crisis (GFC), research spanning millions of reams
has been published, analyzing the global debt, fiscal constraints, limitations
of non-conventional monetary policies, Chinese slowdown, Japanese stagnation,
Commodity meltdown and American economy's frequent flirting with recession.
Contrarians have been
predicting demise of USD as reserve currency, a widespread armed conflict,
disintegration of common Euro area.
Everything is entered
in spreadsheets and factored in forecasts. There is nothing left to
imagination. I believe events like Brexit, China hard landing (CNY drastic
devaluation), massive Oil defaults in USA, and prolonged slowdown in commodity
economies may not led global financial markets to "crash".
If something could
lead to crash, that is unknown and therefore people are not worried about that.
(b) The endgame of ongoing
abnormalities - negative rates, ever expanding central bank balance sheet, and
commodities glut is also well documented and known. No one has any doubts about
that. I therefore believe endgame is more likely to be orderly than chaotic.
(c) It's may not be TINA
alone that is driving foreign investors towards Indian markets. For a larger
part, it could be the realization that Indian economy has gathered the required
escape velocity to enter into a higher orbit and there is some exceptional
profit to be made. TINA will not be able to protect us if the take off fails.
But we still have two years.
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