Can't stop an idea whose time has come

Thought for the day

"Then not only an old man, but also a drunkard, becomes a second time a child."

—Plato (Greek, 427-347BC)

Word for the day

Genuflect (v)

To express a servile attitude.

Malice towards none

Hurricane RaGa has now been downgraded from level 5 to level 0.

First random thought this morning

We have adopted a lot many things from the Europe and US in past one century - ranging from constitution, administration practices, language, food, fashion, TV shows, technology, education system, legal system, architecture, system of medicine, accounting practices, taxation practices, profligacy, violence, and intolerance to music, art, movie plots etc.

Many of these imports violate the conventional concept of Indianness, and many have since been abandoned by the originators themselves.

Our exports to the western cultures include yoga, spirituality, classical dance & music, food, tolerance, non violence, frugality, and altruism.

This trade deficit is blunderous, just like the proverbial gorilla in the room that no one is talking about.

Can't stop an idea whose time has come

Pursuant to my request yesterday, I have received a number of suggestions as to the topics I should be delving upon while formulating my investment strategy for next year or so.

Not surprisingly, most of the people want to know my views on the likely impact of 'Demonetization', 'GST', and 'Trumponomics' on the investment strategy of an Indian investor. Some have asked for stocks ideas to implement the changes in the strategy.

I would like to make it very clear, that in my firm opinion, all these ideas are popular today just because their time has come and not for any other reason. These are culmination of a long drawn process involving a number of socio-economic and political changes. Most investment strategies in fact are already oriented to assume the full implementation of these events.

Any businessman in India would tell you that ever since global financial crisis of 2008-09 (GFC) there has been a concerted effort on part of the government, enforcement agencies and regulators to check money laundering and accumulation of black money. Holding large sum of cash had become seriously difficult for past many years.

In last 3-4years particularly, a number of steps have been taken to curb generation of black money. Fraudulent agriculture income (e.g., Himachal CM Birbhadra Singh); fraudulent real estate deals (e.g., Robert Vadra deals) and regulation of real estate sector; Hawala deals (HSBC Swiss account disclosures, taxation of Vodafone deal, revision of Mauritius and Cyprus treaties; transparency in Defense and Railway purchases; regulation of bullion transactions through TDS and excise duty; AIR for transactions exceeding Rs10lacs; information sharing deals with foreign regulators; curbing of money laundering through fraudulent long term capital gain in penny stocks; FATCA disclosures; etc. are just a few of the steps taken to achieve the objective.

Abolition of high denomination currency notes is certainly a step with widest possible repercussions. But it is in no way the first or the last step in the process. It is a step whose time has just come.

After living with a fractured political mandate for most part of last three decades, we had been consistently witnessing clear and full mandates for past few years. BJP as a political party is ruling in over half the country, and this is what makes it the most appropriate time to implement GST.

The economy is definitely headed towards a more organized and structured business environment in the coming decade or so. The businesses mostly based on tax arbitrage (or evasion) opportunities and non-compliance are going to get extinct in next one decade. That has been my strategy for past couple of years and would continue to be so.

Insofar as Trumponomics is concerned, I believe people are bored from eight of status quo and want a change. They have got the change and are obviously excited. I am too naive to judge the impact on global economics and politics just as now. But the itch to make a guess is certainly there....more next week.

Driven by hope, lacking in optimism

Thought for the day

" Honesty is for the most part less profitable than dishonesty"

—Plato (Greek, 427-347BC)

Word for the day

Humbuggery (n)

Pretense; sham

Malice towards none

I am no big fan of either Saif or Kareena.

The young Taimur has so far done nothing to draw my notice.

First random thought this morning

All of you must have seen students who are not confident of what they have learned in the past many months, and want to revise the entire syllabus just minutes before entering the examination hall. I have even heard some parents complaining that their ward could not do well in exams because he/she woke up late on the exam day and could not revise the notes just before the exams.

The CMs and other senior government functionaries of the five states where polls are likely to be held in next few months these states are behaving just like these students. In just two months, they want to make their respective states look developed, people friendly, business friendly, safe, best place to live for minority communities & the backwards, and much more.

Driven by hope, lacking in optimism

As the 2016th year of Christ draws to a close, it's again time for reflection, reassessment, and restrategizing for investors.

Despite a setback in 4Q2016, the year has been largely satisfactory for Indian investors.

While the benchmark indices are almost unchanged for the year, diversified equity portfolios have yielded 6 to 10% return for the calendar year. The return in hybrid funds has been better in 9-11% range as the fall in bond yields led to outperformance of bond funds which yielded 12-15%.

In other asset classes, global commodities have done really well with crude gaining over 50%, and industrial metals and coal gaining from 15-70% during the year. Despite sharp fall in last couple of months, precious metals are also higher by 7-11% yoy.

Real estate has seen a mixed trend this year. While the housing prices have remain mostly subdued, the commercial and retail assets have seen a revival in many markets.

Standing at the doorsteps of the new year 2017, however, the investors are a worried lot. The optimism seen since March of 2016 is nowhere to be seen.

The fear of unknown is inarguably the dominant sentiment. The impact if changes in US and European politics on global economics and markets is not known yet. But most forecasts are hinting at acceleration in popularity of nationalist agenda against the globalization.

A careful reading of the past few statements of many large central bankers highlights their frustration with the current "new normal" and "whatever it takes" stance, that has been the hallmark of their policy since 2009. US federal reserve has made a beginning to normalize the unconventional zero rate policy. ECB and BoJ too seem to be willing, circumstances permitting. 2017 will be keenly watched for any "disorderly normalization" of the extant policy stance of many central bankers.

So far, most positive statements from market experts, appear based more on hope rather than optimism. The slight tremor in the voice and worries hidden between forehead wrinkles though evidently belies the conviction.

I do unconditionally believe in what Andy said to Red in Shawshank Redemption (1994) "Remember, Red, hope is a good thing, maybe the best of things. And no good thing ever dies". I personally therefore do not mind driving into 2017 with a tank-full of hope. Though I would keep the seatbelt tightly fastened, speed well within limits, and be mostly driving in slow lane.

Next week, I will be sharing my views on investment strategy for 2017 and beyond with the readers.

Would be glad to receive suggestions as to what specific points I should be dealing in my strategy write up. Thanks!