Do it yourself

Last month, in one of my posts ( read here ), I mentioned that “From the events of the past few years, it is evident that the era of peace and global cooperation, which started in the aftermath of two devastating wars in the first half of the twentieth century and flourished after the end of the Cold War in the late 1980s, may be coming to an end. In my view, the year 2024 will see a new paradigm unfolding in global economic, political, and geopolitical spheres. The new paradigm which would take a couple of decades to manifest fully, may inter alia see multiple axes and alliances emerging in the global order, competing with each other for supremacy. Consequently, global trade may get fragmented into multiple trade blocs.” I also expressed a view that “The trend in the financialization of economies may reverse. Physical resource ownership and localized manufacturing may become the primary focus again.” A team of the International Monetary Fund (IMF) analyzed the economic impact of t...

What is most wonderful? Yaksha asked Yudhishthira “what is most wonderful?” Yudhishthira answered – “Every day numerous living entities are dying and going to the abode of Yama. Yet one thinks/believes one will live forever (Immortal). What can be more wonderful than this?” As the spring was paving way for summers in 2020, the entire country was locked down to prevent the spread of Covid-19 pandemic. A few weeks into the lockdown, the skies became blue; peacocks started dancing on city roads; mountains were visible from long distances; roads were empty; air was serene; a pleasant quietness had replaced the annoying cacophony; many misogynists and patriarchs were helping their wives in household chores; many tech illiterates were quickly leaning to use smart devices for communication, shopping & entertainment; the sentiments of frugality, minimalism, spirituality, & patriotism, etc. overpowered vanity, presumptuousness, pretense, selfishness etc.; and new births and deaths were ...

In the context of India stock markets, I found the following two things worth noting on Tuesday: (i)     A number of brokerages wrote strategy notes urging the clients to use the recent “lockdown fear” led correction in stock prices as a good opportunity to buy stocks. Apparently, the strategy appeared to be driven by (a) deep fall followed by a sharp recovery in 2020; and (b) belief that the abundant global and local liquidity and low interest artes will continue to support equity markets for couple of more years at least. (ii)    The IT sector stocks corrected rather sharply after the bellwether TCS announced a decent set of number for 4QFY21 and encouraging commentary for FY22. This highlights, in my view, that markets expectations may be running rather high in terms of corporate performance and payouts. There is virtually no margin for any disappointment on earnings or payout front. Some research reports have taken note of the intensifying second wave ...

After some exciting action post presentation of Union Budget for FY22, the benchmark indices have moved sideways with heightened intraday volatility. The broader markets have definitely outperformed suggesting some superlative returns for the investors. However, when assessed from the rout of small and midcaps in 2018 and 2019, it is clear that broader markets may not have actually yielded much return, even to the investors who have stayed put for 3year. For example, Nifty Smallcap100 index has not yielded any return for past 3years; and Nifty Midcap100 return is only slightly better than the bank deposit return since March 2018. Notwithstanding the massive visual gains recorded by equity prices in past 12 months, the portfolio returns for most investors may have been below par. The returns on debt part of the portfolio have been poor, with real returns being negative in many cases. For a large proportion of investors, debt part is usually equal to or more than the equity part. S...

The pace of vaccination across the globe is accelerating with each passing day. It is hopes that in next 6 months, we may have a reasonable number of people inoculated against Covid-19 infection; and the life may begin to normalize (even if it is new normal!) and become more predictable as compared to the life in 2020. However, from investors’ perspective a rather strange thing seems to be happening. Many investors had bought shares of leading vaccine manufacturers in the hope of extraordinary gains. To their disappointment, many of them are suffering losses. Pfizer Inc. (-8.1% in one year) and AstraZeneca (-4.75% in one year) are two examples; though Moderna Inc (up 740% in one year) has done well. In Indian context, AstraZeneca (-20% YTD 2021); Pfizer (-13% YTD 2021) Dr Reddy’s Lab (-8% YTD 2020) have all performed poorly on stock exchanges. The other listed vaccine prospect Cadila Healthcare (-2% YTD 2021) is also doing poorly. Obviously, it is a case of the excessive exuber...

 The two thousand twentieth year of Christ is coming to an end. This year has been totally forgettable and remarkably transforming at the same time. It reminds me of the title of the autobiography of legendry poet Dr. Harivansh Rai Bachachan – “ क्या भूलूँ , क्या याद करूँ ”. Notwithstanding the all-time high levels of stock market indices in most countries; the global financial system inundated with trillions of dollars in free liquidity; over US$20trn worth of bonds yielding negative return globally; the massive economic and social shock of Covid-19 pandemic has left billions of people in distress. The inequalities of income, wealth and opportunities have risen to new highs. Significant developments have been reported on the front of vaccine development to check the spread of Covid-19 virus. Many countries have already authorized emergency use of some vaccines; and people are being administered such authorized vaccines. Nonetheless, recently a fresh wave of mutated version ...

UK has allowed the administration of vaccine for SARS-CoV-2 virus (commonly known as Covid-19) developed by Pfizer. Russia and Chinese authorities have also confirmed approval of separate vaccines. In India also couple of developers has expressed confidence that an effective vaccine will soon be available for Indian population. This is certainly a matter of relief for the distressed mankind living in fear since outbreak of the pandemic. However, for the investors in stock markets wider availability of vaccine could be a matter of slight concern. So far the investors in equity have had a decent run in 2020, regardless of the severe correction in the early days of the pandemic. In my view, a large part of the price gains in equity stocks could be attributed to the accommodative monetary policy adopted by the central bankers world over. In past 9 months, a significant part of the cheap and abundant money may have actually flown to the financial assets (mostly equities) as (i) the re...

 I remind myself of this narration almost every market cycle. I think, it is the time to reiterate once again. Have you ever been to vegetable market after 9:30PM? The market at 9:30PM is very different from the market at 5:30PM. At 5:30PM, the market is less crowded. The produce being sold is good and fresh. The customer has larger variety to choose from. The customer is also at a liberty to choose the best from the available stock. The vendors are patient and polite, and willing to negotiate the prices. As the day progresses, the crowd increases. The best of the stuff is already sold. Prices begin to come down slowly. The vendors now become little impatient and less polite and mostly in "take it or leave it" mode. By 9:30PM, most of the stuff is already sold, and only inferior quality residue is left. The vendors are in a hurry to wind up the shops and go back home. The prices are slashed. There is big discount on buying large quantities. Vendors are aggressive and ve...

“Generation gap” has perhaps been a subject of study, discussion and debate ever since beginning of civilization. The new generations have been adopting new ways and methods of living, and the older generations have been rejecting these ways and methods as degeneration. The human civilization has evolved, regardless of this persistent conflict between experience and experiment. It could be matter of debate whether experience is good as a guide or driver. But in my view, there is no doubt that the innovation (experiment) of new ways and methods of living and doing things has been the primary driver of the human civilization so far. With the advancement in science and technology, the life span of people has increased materially in post WWII era especially. This expansion in life span has material impact on the dimensions of “generation gap”. The gap which was historically visible mostly between grandfather and grandsons is now sometime visible even in siblings born 5-6yrs apart. In...

Continuing from Tuesday Repayment of Debt . Also see How will this tiger ride end? The overall poverty level in the world has seen material decline over past three decades as highly populated countries like China, India, and Bangladesh pulled millions of people out of abysmal poverty conditions; even though, this period has also seen sharp rise in economic inequalities also. The pace of poverty reduction has reduced since global financial crisis, as the flow of development aid from developed economies to the poor countries saw a marked decline; commodities dominated economies suffered due to persistent deflationary pressures; EM currencies weakened; and abundantly available credit at near zero interest rates helped the large global corporations and investors to increase their wealth disproportionately. The global economic shut down induced by the outbreak of deadly COVID-19 virus is threatening to reverse the process of poverty alleviation. Millions of people w...

The decoupling of real economy and financial markets in past few months has certainly caught many market participants by surprise. There is no dearth of experts and masters of market who are claiming to have caught the March bottom and minted money. I have no doubts that they might have actually achieved what they claim. However, the publically available evidence suggests that most mutual funds have yielded negative return in YTD2021 and in past one year. The 5year return is worse than the average fixed deposit interest in this period. The investors are thus caught in a quandary - whether they should use this bounce in the stock prices to redeem their investments or invest more money. The problem in fact seems more acute with the investors who decided to play "safe than sorry" and redeemed their investments during March-April and are sitting on the fringes. Many of them are wondering whether it is a good time to invest back in equities; especially when ...