At the beginning
of the year 2019, a large number of experts had forecast that:
(a) USD
may weaken as trade war begins to hurt;
(b) Global
growth may slow down as Central Banks (with the exception of BoJ) tighten the
monetary policy. Fed was expected to hike 3-4times in 2019. ECB was expected to
begin tighten from last quarter of 2019.
(c) Inflation
to pick up as US inches towards full employment and China eases. Commodities
were therefore expected to do well.
(d) The
"bubble" called Bitcoin may burst completely.
(e) Emerging
markets may do well in view of the weaker USD and Crude forecasts.
The opinion was
divided on US treasury bonds, but a majority expected the benchmark yields to
either rise or at least stay above 3% mark. Gold and silver did not find
mention in most strategy reports and were advised to be avoidable assets. The
Chinese Yuan (CNY) above 7CNY/USD was widely anticipated to be a disaster for
global trade.
A thumping
victory for BJP led NDA in Indian general election was widely expected to be a
major stimulus for Indian economy and hence Indian equities and currency. Some
enthusiastic forecasters envisioned USDINR at 65-66 and Nifty at 13000 by the
end of 2019.
The reality is
however turning out to quite different.
(i) The
Chinese Yuan (CNY) is sustaining above 7CNY/USD for three weeks now.
(ii) INRUSD
is flirting with 72 mark and forecasters are now more inclined towards 75
rather than 65.
(iii) US
10yr benchmark yields (1.51%) are comfortable around the lowest level since
2008 crisis. No major central bank in the world is talking about a possibility
of a rate hike in near term
(iv) Bitcoins
are firmly above $10k mark and receiving due respect from many quarters.
(v) Gold
and silver turning out to be best performing assets amidst aggressive calls for
buying from gurus.
The short point
is that the global economy, markets and geo-politics are too complex to
assimilate and forecast at this point in time. Forecasting a trend under these
circumstances is mostly shooting in the dark. Wildly swinging between greed and
fear; despair and hope, dismay and enthusiasm will only make the going tougher.
The best strategy
under these circumstances is to follow a straight path - set attainable goals;
define the strategy; make a plan and execute it religiously, without fear or
ebullition.
My investment
goals and strategy for next 12months are as follows:
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