Do it yourself

Year 2020 has been a very eventful year so far ( see here ). In past six months many events have taken place which will have long term repercussions. In that sense these six months could be compared to the period between May 1990 and December 1990 ( see here ). While long term implications of these events will unfold over many year to follow; in the immediate term we have seen the global economy slipping into one of the worst recessions since the great depression of 1930s ( see here ). The corporate earnings have been greatly impacted in 4QFY20 and 1QFY21 by the COVID-19 induced lockdown; and the visibility of next few quarters is also clouded. The earnings estimates for FY21 and FY22 have been significantly moderated accordingly. The performance of stock markets however appears materially diverging from the economic and corporate performance. A sharp outperformance of midcap stocks, especially those with relatively poor earnings stability and outlook has raised concerns abo...

Continuing from Wednesday ( see here ) Not long back in the global history, aluminum was thought to be more precious than gold. Most powerful kings were served food in aluminum utensils while the lesser knights had to do with gold flatware. The sudden change in the value of aluminum took place when much cheaper means of refining the ore became available. Suddenly, it was disposable – as in aluminum foil or cola cans. In no time it transformed from most expensive thing in the world to garbage. Similarly, in African continent for long common salt remained a more prominent store of value and medium of exchange than gold. For past two centuries though gold has been globally preferred as a store of value over another commodity, primarily for its limited supply and physical traits that make it indestructible. However, in past four decades, the demand of gold for storage of value, vanity, social & financial security, and religiously important object shall has diminished. In my ...

Continuing from yesterday ( see here ) Before I share my thoughts on USD and Gold, I would like to make it clear that I am a simpleton who: (a)    does not understand the economics beyond its first lesson which says all economic decisions involve a trade off and price of things having economic value is determined by their demand and supply at that given point in time; (b)    does not know how to play with data on Microsoft Excel Sheet; (c)     likes to discover investment themes in streets, markets and fields; and (d)    seriously believes that numbers invariably follow the good story. In my view, the currency of any country is nothing but an “unsecured zero interest bond” issued by the respective central bankers. This bond usually loses its value with the passage of time due to inflation. Since 2008 global financial crisis, central bankers in the developed world, especially US Federal Reserve ...

Last week, I had shared latest update relating to my investment strategy. I had highlighted that we may be standing at the threshold of a new economic and market cycle. The global economics, politics and markets may change rather dramatically in next couple of years, in the aftermath of the current crisis. I have therefore decided to reorient my investment portfolio to suit what I believe could be the shape of the new world. ( see here ) Many readers have expressed surprise on my decision to (a) raise the weight of equities in my asset allocation; especially at this point in time when almost everything appears uncertain and future is shrouded in thick black clouds; and (b) prefer Neutral currencies like Cryptos over USD and Gold. I would like to address the inquisitions of the readers as follows. It is pertinent to note that I have been expecting a paradigm shift in the global markets for past 5 years now ( for example see here ). Especially in past 5 years there have ...

For past couple of weeks I have shared many random thoughts and feedback from my sources, and views of some experts regarding the current state of affairs in India. As promised, I shall now present my thoughts on investment strategy for post lock down period. Key message 1.     The current crisis is unprecedented in the sense that it has seriously impacted the liquidity, solvency and viability of a large number of businesses, all at the same time. The number of businesses going out of business before this crisis ends would therefore be much larger than the crises faced by global economy in past 75 years since the end of WWII. 2.     The only way out of this crisis is to inflate a colossal bubble in asset prices, which is equally unprecedented. I believe that the foundation of next big global bull market will be laid in next 12 months. Like every time before, the next bull market will be much bigger than the previous one. We shal...