Some food for thought
"Two thousand years ago,
we abandoned imperialism and militarism. We have been peace-lovers ever
since."
—Sun Yat-sen (Chinese leader,
1866-1925)
Word for the day
Valorous (adj)
Having valor; courageous; valiant; brave
First random thought this morning
In post independence India, there have been many instances when
the government of the day has criticized the Supreme Court of India for
"overreach" in the matters that technically fall in government's
domain. There have also been instances when the government did decide to
overturn the Supreme Court decision through legislation. However, seldom the
masses got involved in the tussle between the judiciary and executive.
However, what is happening now is unprecedented.
In past couple of months the Supreme Court of India has been
subjected to severe criticism by common people of the country. The Supreme
Court has been virtually reprimanded for first taking a firm stand on Sabrimala
temple entry issue and then not affording any urgency to Ayodhya case.
To make the matter worst, the people of the country were incited
to burst crackers on this Diwali night, in blatant contempt of the Court's
directives. The defiant people trumpeted their contemptuous act on social
media, duly backed by the local politicians. Reading of the twitter timeline,
day after Diwali felt as if we are living in a banana republic with no rule of
law.
At this point in time, I am not taking any sides. In principle,
I believe that judiciary has no role in the matters relating to customs and
faith. However, in my opinion, the present instances of judicial intervention
in customary things must be seen through the broken prism of governance in country.
In my view, it is for the popular government to mobilize public
opinions against undesirable customs. Few examples are drinking & gambling
on festivals, wedding gifts (Dowry) and unaffordable post death feast of
village people, etc.
I fail to understand, if our prime Minister could appeal to
people to voluntarily give up LPG subsidy (with stupendous impact as per
official claims), cooperate and bear pain caused by demonetization, why he
cannot appeal to people (at least to 10cr members of BJP) to not burst harmful
crackers, not to burn crop, to manage construction dust properly, etc.
His appeal would have motivated millions of BJP supporters to
promote a pollution free Diwali, instead of inciting contempt of the Supreme
Court.
Or, our PM is no more confident of his appeal working on people
of India?
Chart of the Day
A random chat
Yesterday I highlighted that smart money may have been gradually
withdrawing from Indian equities since past many months. I got numerous calls
and messages regarding my observations from AMFI data. Surprisingly, many
people appear concurring with me. They however are wondering where this smart
money may after all be going!
This reminds me of a recent chat with a dear friend and the best
fund manager I know. I would take the risk of annoying him, and share some
parts of the 'chat' with my readers.
"XXX Ltd and YYY Ltd, despite being fantastic companies on
all counts, are not finding any investors interest at sub 12x PE of TTM EPS.
Same is true of 100s of other stocks in India and globally. Therefore, the
issue to analyze is why smart money is so disinterested in virtually
everything!"
"Most styles of investment are failing except for momentum.
And momentum is getting narrower since liquidity is critical for success of
momentum and liquidity is drying out."
"Is this due to rise of passive money?"
"Whatever it is, one thing I feel is that, lack of adequate
private capex recovery in last decade is owing to general disinterest among
investors in capacity creation of basic resources like oil and minerals as well
as manufactured goods. Just like dot com days, most money is just going into
e-commerce. Net conclusion is that, current bull market is akin to Dot
com."
"Other observations is that, small/midcap pain has been
felt everywhere in the world since Feb including USA. I thought, the pain was
specific to India owing to SEBI actions like MF classification and ASM
etc."
"I have been saying the answer will come from philosophy
and not economics. The markets must be seen from the viewpoint of big Reset
that is being attempted globally since GFC. Though only some scattered progress
is visible of this Reset, smart money may rightly be waiting at fringes for
more clarity to emerge. The key risk this money is taking is that it may be
reduced to ashes in entirety (Global DeMo). People are trying things like
Cryptoes and derivatives for Chinese assets. But not at a massive scale as
yet."
"Real economy and stock markets cycles can be different.
Real economy as such is seeing L shaped recovery globally. Exports hub like Korea,
Thailand and Vietnam are getting too old. Developed economy quickly getting too
old to consume. USA, possibly the youngest in terms of average age of
population among developed countries is seeing dramatic changes in demography.
Apparently USA is now seeing lowest number of child birth since 1920."
"Along with increase in life expectancy, rise in amount of
time spent on retirement, and fall in return on investment, people need to save
more and spend less. These are disinflationary for sure. World needs to consume
more. All the technological advances like AI will be used to produce more and
there is excess supply everywhere. There lies my hope for India which has a
billion hungry stomachs. Most of Africa, Latin America and much of Eastern
Europe is like India only."
"The most unfortunate part is that India might remain a
'taker' this time too. We will not have any trend of our own, just like in past
150yrs since industrial revolution. Due to shortsightedness of our politicians
we are perhaps missing this AI revolution too. The pursuit of strategic power
of Modi will go in vain, if it is not adequately supplemented with
technological prowess. My worry therefore is not about lack of opportunity. It
is rather about the abundance of opportunities, that we are foolishly
missing."
