Do it yourself

If we cut the noise and overcome our recency bias, Indian stocks have given a decent return over the past five years; though this period had been particularly eventful. We witnessed the worst pandemic in over a century crippling the world. A variety of economic and geo-political conflicts impeded the global economy. The financial markets witnessed unprecedented liquidity deluge that led to over US$20trn bonds trading at a negative yield; followed by sharp monetary tightening. The world moved from severe deflationary conditions to sharp inflationary spikes. Central banks cut the policy rates close to zero (even below zero in some cases) and then hiked the rates at the fastest speed in five decades. In the domestic economy, we saw macro parameters like inflation, fiscal deficit, current account deficit etc. worsening sharply. We witnessed a monetary easing and tightening cycle. Banks went through a massive credit cycle. The benchmark Nifty50 has yielded an 11.4% CAGR over the past fi...

  योगस्थ : कुरु कर्माणि सङ्गं त्यक्त्वा धनञ्जय | सिद्ध्यसिद्ध्यो : समो भूत्वा समत्वं योग उच्यते ||2:48|| Be steadfast in the performance of your duty, O Arjun, abandoning attachment to success and failure. Such equanimity is called Yog. (Srimad Bhagavad Gita, Chapter 2 Verse 48) बुद्धियुक्तो जहातीह उभे सुकृतदुष्कृते | तस्माद्योगाय युज्यस्व योग : कर्मसु कौशलम् ||2:50|| One who prudently practices the science of work without attachment can get rid of both good and bad reactions in this life itself. Therefore, strive for Yog, which is the art of working skillfully (in proper consciousness). (Srimad Bhagavad Gita, Chapter 2 Verse 50) In the present times, ‘politics’ is a struggle to find balance between economics and popularity. Good economics (fiscal prudence; balanced monetary policy; equitable taxation; etc.) usually does not get popular votes. Whereas poor economics (subsidies; helicopter money; unsustainable incentives like tax concessions, lower rates...

 An impromptu discussion with my friend, & favourite fund manager, yesterday was quite disconcerting. We raised some pertinent questions and tried answering those questions with even more pertinent questions; the answers though remained elusive. The discussion started from my yesterday’s note ( see here ) which highlighted that despite signs of recovery, India’s GDP may contract in 4QFY21 and may barely grow at 1% CAGR during twp year period (FY20-FY22). Also, some suspect, FY22 may also not be as good (10%+ yoy growth) as presently anticipated. Some of the questions that did not have clear answers were— ·          How could market be excited about cyclicals, especially commodities, with 1% CAGR growth over FY20-FY22? ·          If logistic constraints are leading to higher commodity prices, should investors be not worried about manufacturers who face raw material shortages, higher input cost ...