State of the market address…..

Subra, is this the best time to enter the market?

Boys, girls, fathers, journos, readers everybody asks me this question, almost every day.

Many want to see if I change from what I said the previous week, some to go home and laugh saying – see the market has come down ‘this guy knows nothing’, some to really try to invest, some to just dump Rs. 50000 in one share – the reasons are endless. What should I tell them? Since I have written about this many many times, here is a note…when in doubt write a long note. Nobody reads it. Those who read it, do not follow it…..

1. If you have been in the market long enough you KNOW that since 2008-9 the market HAS MORE THAN DOUBLED. The return from the low point to the highest point is fantastic. You want anything better than that, you do not deserve to be in the equity market. you should be in Las Vegas.

2. Repeating point no. 1. In the year calendar 2012, 25% return is what equity markets gave you. This is 3 years return on the debt market. Not bad, right?

3. Indian fixed income market is in good shape – even from the saver’s point of view. If you can get AAA paper at 9% p.a. return it is a good place to keep your money. I do not like the Inflation figure, and I do not think this management is capable of doing anything. If you invest in a long bond fund today, I think you should get a REAL return over the next 5 years. However if you buy US gilt, you will cry in 2 years time. Guaranteed.

4. US economy is growing. China is growing. UK is growing.  Japan is improving, other parts of Europe are alive and kicking. Some countries like Ireland are really having a good time….There is no reason at all that India will not grow well. Remember a 1 US Trillion $ growing at 10% will create the same number of jobs as a 2 US Trillion $ growing at 5%. Growth slow down in India is bad, but not something to loose sleep over..

5. The US will have a few Municipal bankruptcies, Europe will see some downgrades, but for countries as as whole, life is not too bad. All Indian states run a huge deficit. Municipal bodies are poorly managed. Our deficit will hurt us, and we have no clue how to bring it down….it will get worse if you take the deficits what are going to hit us.

6. We have learnt to live with political uncertainty..it is as bad as it can be. No risk coming from this side.

7. Market timing has not worked for anybody. Ask John Templeton (oops, he is no longer with us). So start investing especially if you have money for the long haul. Long means 7-10 years. Investing means doing a SIP….

8. It is never too late to start. Better today than tomorrow. The earlier you start the greater the time money can compound. It is so damn simple that people do not believe it.

9. Cash is the MOST EXPENSIVE asset class – especially if you are earning 4% interest and inflation is about 10%……lol

10. Asset allocation rules have not changed. If you do not have 5-7-10 years for your goals, do not put too much money in equities and then crib…..

There could be more….

 

 

 

 

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3 Responses to “State of the market address…..”

  1. Subra, At 52 weeks low, Coro is looking too good to resist….

  2. Subra sir,

    In one of your earlier post I had a query can you please answer it –

    When it comes to investing we say that inflation errodes the capital but when it comes to loan, inflation is generally not considered.

    If interest rate on loan = inflation rate , does that mean we get to use that money for free? Please let us know your thoughts?

    Thanks
    abhay

  3. Nir Dhar,

    then it must be far more tempting for me, right? I have sold during the last 6-7 months – for a diff reason though…the new fert policy is not good for Coro…but hasten to add still do hold…

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