When any asset class goes up and keeps going up…people start finding reasons for the same. Normally you cannot find a reason. When you cannot find a reason, you have to say ‘Buyers are more than Sellers, so prices are going up’.

Hey, this is just not sexy enough for our media. Imagine me going there and saying ‘Oh there were more buyers in Colgate and therefore the price of Colgate shares went up’ – you will simply switch channels, right?

So I have to make it look sexy. So I have to say ‘This time it is different’ – but Sir John Templeton made these words too damn famous and said ‘these are dangerous words’. He is gone, but this word has become immortal.

When gold and real estate prices went up, we had to say “Indians are investing in REAL assets and not in financial assets”. Can’t blame the poor chap. With accounting frauds, over charging mutual funds and over-over-over charging unit linked plans, churning equity advisers – the poor chap has had a terrible nightmare in the BFSI space!

So he invested in gold and real estate. However a lot of money (around the world, not just in India) is sitting on NEGATIVE REAL RETURNS…so something has to give.

To me when I hear of US $ 25 billion mergers, it is a clear case of cheap money looking for action. So merchant bankers who are itchy, companies which are sitting on tons of cash -and being ripped by analysts saying ‘why do u have so much cash?’….HAVE TO DO SOMETHING…so they are announcing big mergers.

Now for the next theory. Rotation of assets theory. ‘Subra real estate and gold have had their turn and now they have reached a high point, SO THEREFORE the cash will start chasing equities. Hmmm nothing wrong with that argument, but only if life were so simple!

Sugar, energy (oil, gas, solar) the government has created a MESS, Infra ministers are the money making machines for the powers that be, banks are strapped with the NPAs, the common man does not want to pay even for the LEGITIMATE business expenses of infra providers…..

I AM NOT SAYING THAT THE MARKETS CANNOT GO UP, I am just saying be careful. Respect cash. If Colgate has more cash than GMR, and the certainty of cash flow is legendary, obviously Colgate will have a better price. Delhi airport looking better than a tube of tooth paste will not matter…

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  1. sir , totally agree , but right -all infra business are painted with same brush , and lot of recency biased views ( consumer story very good , infra very bad ) as per last 5yrs ,so every one is extrapolating those nos in next 5 yrs also

    well different opinions make market

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