"Hide our ignorance as we will, an evening of wine soon reveals
it."
—– Heraclitus
(Greek, 544-483BC)
Word
for the day
Salaam (n)
A salutation meaning “peace,” used especially in Islamic countries.
Malice
towards none
Democracy in India is a
farce. Politicians swear by democratic traditions only until they are elected
to a public office. As soon as they assume the office, they become feudal
lords, irrespective of their socio-economic backgrounds and political ideologies.
They need servants to carry
their mobile phones, bags and briefcases; to open doors of cars for them; to
open doors of elevators for them.
They seek privileges even in
temples and hospitals.
First random
thought this morning
Life of suitable boys in smaller cities and town is really tough. No
girl from larger towns and cities wants to relocate there for marrying them;
and most eligible girls from their towns want to relocate to larger towns after
marriage.
A very rich boy from a town in UP aptly put it like this - "Money can certainly not get you
everything. For few things you need to slug out in Mumbai/Delhi".
"Kya Lagta hai?" (Whats the outlook?)
Nowadays, I am getting numerous calls every day,
asking invariably the same couple of questions, i.e., "Kya Lagta
hai?" (Whats the outlook?); and "Kya karna chayiye?" (what
should be the strategy?)
The first questions seeks opinion
on both -the political situation as well as financial markets. The second
question is limited to the financial markets.
Insofar as the political situation
is concerned, my view has been consistent that BJP is well on its way to become
the Congress of 1950s and 1960s. In few years, it will have competition only
from within.
In near term, the party is most
likely to win the assembly elections in UP and Uttrakhand. In Punjab BJP and
SAD alliance is losing, and In Goa and Manipur they are very much in the race.
Regarding investment, I may
reiterate what I have been saying for past three decades.
Investors must be well versed with
their socio-economic environment. They should be aware about the events and
circumstances that may impact their investment portfolio. But it is not
necessary to react to each and every event and data point that comes to their
knowledge. In fact most events and data points may actually not need any action
on their part.
Investors may better follow a rather
simple investment style to achieve their investment goals. It is highly likely
that most find this path boringly long and apparently less rewarding, but in my
view this is the only way sustainable returns could be obtained over a longer
period of time.
I believe, taking contrarian
views, speculating policy changes and implications of election outcome,
anticipating short term performance (e.g., monthly sales, quarterly profits
etc.) and reacting to that, or arbitrage on information/rumor of a corporate
action are examples of circuitous roads or short cuts that usually lead us
nowhere.
Taking straight road means
investing in businesses that are likely to do well (sustainable revenue growth
and profitability), generating strong cash flows; have sustainable gearing;
timely adapt to the emerging technology and market trends, and most important
have consistently enhanced shareholder value.
These businesses need necessarily
not be in the “hot sectors” like commodities in early 1990’s, ITeS in late
1999s, or infrastructure and financials in 2004-07. These businesses may
necessarily not be large enough to find place in benchmark indices.
I have discussed it many times in
past. However, given that the market may be entering a prolonged period of high
volatility and low returns, making investors jittery and indecisive, in next
few days I shall present my thoughts as to why contrarianism or lottery seeking
attitude to investing might not be the right one and may expose investors to
greater losses.
Of course there is nothing
proprietary about these thoughts. Many people have often repeated it.
Nonetheless, I feel, like religious rituals and chants, these also need to be
practiced and chanted regularly.
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