Both Wall Street and Dalal Street have some nonsense sayings. Let us see if you know them, understand them, or believe them:

  1. Market is still much cheaper, adjusted to inflation, than in Dec 2007. – wow, really? says who? when you see Equity returns, and adjust it to inflation, and compare it to the prevailing PE – you are not doing anything scientific, stop fooling with macro and micro indicators to see how the market is valued. The kind of money that the mutual fund industry is getting in NOW is far, far higher than ever before.
  2. There is a lot of cash in the sidelines: When I sell, I will have cash too, and that will also be in the sideline?
  3. There are more buyers than sellers: One of the worst statements. For every buyer there is an equal and opposite seller. Period.
  4. Stocks are attractive BECAUSE bonds are over priced: Actually in times of QE both can be wrongly priced for long periods.
  5. Bond markets are ATTRACTIVELY priced because interest rates will fall! Really? says who? Even fund managers in the debt side get the calls wrong. Sometimes direction wrong, almost always quantum of change wrong.
  6. The higher the stocks go, the more attractive they get: Actually as price increases, moat decreases, and risk INCREASES.
  7. There is no alternative to Equity mutual funds: Nonsense, even with mutual funds, you need to be invested in direct equities.
  8. Equity investing is difficult, it is better left to the professional: Statement sponsored by the mutual fund industry. Caveat.
  9. Markets cannot go down as long as the FIIs keep investing: So when the FII sell, market cannot go up? Nonsense, stop treating FII as one animal. The FIIs who invest in India represent a lot of countries, so each FII is different from the other. Media loves clubbing them together and arriving at a nonsensical number and a nonsensical conclusion.
  10. We will see a rotation of money from bonds to equities: makes no sense at all in the Indian context. We do not have a robust retail bond market. Our moneys in the banks and post office is growing at a lesser rate as compared to equities. However the base of the debt retail products is so high, that it will take a few decades for the equity markets to catch up.
  11. The US (world, Europe, Japan…) is in a new Normal, and we have to accept that: Nonsense, the whole world will need to pare down the debt. We have kicked the can long that is all. One day the coke can will stare us in the face. If it happens after 30 years, I hope to be dead that is all.

..cannot think of more…please add your own in the comments column..not on FB please…here!!

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  1. Sir, with regard to point-11, what if can can not be kicked further and explode in 2016? any insurance against such event?

  2. What is scary is that 28yr old classmate i just met who makes 20k a month,
    just bought a iPhone 6S for 75k on emi. Seeing me utterly shocked he said
    everyone is his office does it and that this is the new normal. !!!

  3. @ Arhant, yes, and we can list so many scarier experiences like spending 60% of take home on home loan EMIs, going to foreign vacations on personal loans, and so on.

  4. I think you are not saying about any news media who are compelled to talk through out, trying to say something new or trying to say the same thing in a new style. Even if we are given that kind of job we too would have.

    Savithri

  5. Subra ji, Please help to change the blog formatting to be mobile reading friendly. Right now it is difficult to read your blog on mobile.

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