Do it yourself

The last earnings season for FY20 has started. The three IT majors have announced results which appear good under the given circumstances. HDFC Bank also announced an encouraging set of numbers. The brokerages have drastically cut estimates for FY21 and FY22 earnings apparently to factor in the business disruption caused by the lockdown. Though there is still large variance in the estimates, the consensus appears to be favoring a flat earnings growth in FY21 and single digit growth in FY21. After reviewing earnings estimates of numerous brokerages, I have realized that respective analysts might have just used this opportunity to climb down from their egregious estimates, which have proven consistently wrong for past 5 years at least. Their basic premise still appear erroneous to me, though the data now appears much closer to the reality. I would like to highlight just three points in this context: 1.     The average earnings growth of Indian c...

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...

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. ...