Do it yourself

Last week I shared my observations about the challenges currently being faced by investors ( see Anxious, stressed and desperate ). Many readers have expressed their agreement with my thoughts. However, they found it inadequate and inconsequential. They have written to me, asking for a prescription for remedy rather than mere diagnosis of the problem. My discussions with them indicate that many of these investors are not convinced about the sustainability of current stock prices and continue to expect a sharp correction. Regardless, they find the daily rise in stock prices alluring and difficult to resist. In this intense struggle between their convictions, expectations, beliefs, fear of missing out (FOMO) on a sharp rally (if their conviction is misplaced), and greed to make some quick money, some of them appear to have already surrendered to their fears (FOMO) and greed and invested in stocks which normally they would have avoided due to inferior quality of management, earnings and/o...

 I have always believed that “equity investment” is a serious business but mostly done in a casual manner. In past three decades I have observed that most investors take equity investment decisions based on factors that are not related to the underlying business of the company they are investing in. While this may be more true for the small household investors (Retail) and High Networth Individuals (HNI); the professional fund managers (Institutions) and large traders are also seen taking decisions based purely on factors like politics, geopolitics, and monthly or weekly data (trade, jobs, production), etc. No wonder the “breaking news” on TV channels causes more volatility in stock prices than the management guidance about the business of the company. I have seen many Retail and HNI investors spending less effort and time in taking equity investment decisions than they would normally spend on buying a shirt. And worst, they spend much less effort and time in taking a decision to...

For past one month, I have been struggling to suitably modify my investment strategy to factor in three things: 1.     Narrow physical global borders and wider and more liberal and freer international information highways. 2.     Zero cash flows for businesses for a protracted period. This factor used to be an integral part of equity valuation during the days of strong trade unions in 1960s to 1980s. 3.     Potential new leadership that will drive the markets in 2020s. During my quest, I remembered an event from my childhood, when we used to live in Agra town of UP. It was summer of 1979, when suddenly one day one of my uncles came to our house and announced that he will take everyone in the family to show the latest Bollywood blockbuster Gol Maal . Those were the days when children were least interested in indoor things like Cinema and TV. To lure the children, the uncle promised a grand treat post movie show. ...

I have narrated this story many times before. This is in fact one of my favorite instance from Hindu mythology. Once the forces of good (Sura) and evil (Asura) had a protracted battle. The battle lasted so long that both the groups exhausted all their resources and valor. Completely tired, wounded, frustrated and exhausted, they approached the savior Lord Vishnu. The Savior advised them to go and explore the great ocean (Sagar Manthan) to find new resources and vigor to make a fresh beginning. Following the advice, both the groups went to the great ocean and explored it extensively. During their exploration they discovered huge amount of wealth and resources that included the Amruta (nectar) that would immortalize the consumer and Vish (venom) that would destroy whoever consumes it. Realizing that if the evil forces get the access to Amruta and other resources found during the exploration it would seriously jeopardize the interest of the forces of good, Lord Vish...

After initial round of denial and complacency, the global markets seems to be waking up to the grave threat that the spread of coronavirus poses to the global economy and therefore global markets. As more foreigners emerge out of China mainland, the information opaqueness is diminishing insofar as the official Chinese claims and the popular perception of the spread of virus is concerned. It appears that the impact of virus far more serious initially estimated by global community or communicated by Chinese officials. In past two weeks the reports have suggested that the coronavirus has invaded many more territories across Asia and Europe. Japan and South East Asia Countries appear to be worst impacted. Japan and South Korea have raised the threat alert level to the highest that allows the government to lock down cities and businesses. Italy has also reportedly shut down schools and crowded market places and stadiums till further notice. WHO has feared that the vir...

Since I reviewed my investment strategy three months ago ( see here ), few things have changed in the economy and market place; the most noteworthy being the following: (i)     The economic slowdown has become more pronounced. Both consumption and investment demand have slowed to multiyear low levels. The government has admitted that this slowdown is unique in nature, since it is for the first time in India that a economic slowdown has been triggered by poor demand growth rather than the usual supply side constraints. Many corporates, especially consumer facing businesses like FMCG and Automobile have echoed similar views. However, the recognition of the unique character of the slowdown within the government has been quite delayed. This has resulted in some misdirected policy actions. (ii)    The government has started the process of restructuring of tax laws, beginning with the announcement of new structure of the corporate tax rates. This has ...

The first half of the current fiscal (1HFY20) is almost over. On the domestic front, the past six months have been quite eventful for the country in general, and the economy & financial markets in particular. Politically , the six month period witnessed the PM Modi led NDA returning to power with unexpectedly strong majority. Continuing with the tradition of unpredictable policy responses, the government has rewritten the rules for engagement with Pakistan and China by abrogating the controversial Article 370 of the constitution. Besides, a definitive move has been made towards implementing a uniform civil code by outlawing the practice of triple talaq (The right of men to divorce their wives instantly through oral or text communication) prevalent amongst Indian Muslims. A long standing dispute over the construction of Sri Ram Temple in Ayodhya has been fast tracked and a final Supreme Court Verdict on the dispute is expected in next 2 months. These developments ha...