In the Indian markets when one asset class is losing, other asset classes also catch up fast. So if you think you have invested in real estate, equities and debt – you may not be diversified enough.
In fact if you have diversified across asset classes at all points in time, one of the asset classes should be giving you NEGATIVE RETURNS. If this is not happening, the diversification is not enough 🙂 . For example a geographical diversification should take you to US, Asia, Europe for sure…
Also need to remember that money is fungible – and moves across geographies and asset classes. This is dangerous.
Indian promoters also move money across companies – only the very very high corporate governance companies do not play such games. Look at the fact that Vijay Mallaya is trying to take money from his other companies to fund KF.
Take the similar case in the US. One very big loan in the US bank’s books is the student loans. Student loans are not covered by the bankruptcy laws. Imagine a family paying off the housing mortgage for 10 extra years because the property prices have come down. Their son starts repaying the student loan – and he may have to pay that for 10 more years too.
Now this kid has a education loan, parents (and he too) have a housing mortgage, both have a car loan…..and NO JOB.
I think the next sub-prime is the Student Loan program.
Soon the rupee will be available for Rs. 40. And the rupee will be fully convertible. Wow!!
Remember: You saw it here first….
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