At various points in time from 1979 till today I could have said this and sounded smart. It is always easy to sound smart being NEGATIVE than being POSITIVE. However, to make money you need to be in equities, not in cash. Simple law of life, is it not?

So let me tell you – falling apart of the Janata party, Indira being trounced, After Rajiv who?, will Sonia be able to hold the Congress together? Union Carbide….OMG all Mnc will leave India, ………..long list, is it not? Well, through all this the Index moved from 100 to 40,000. Not bad, eh?

So should you have been in cash? when? that is a very difficult question to answer. The real answer is “when the pe was a sensational 89 or 99…” for a company. However some companies with fabulous Gross and Net margins have always got a much higher PE than what ‘ANALysts’ thought was right. History thought otherwise. So some companies are at a permanently high PE, some at a permanently low PE.

The problem is the next crisis is surely coming. The seed has been sown – Brexit, Europe break up, BJP losing next 3 state elections, or people saying “what has BJP done”, US wondering what to do with China, China hard landing, US $ going to 75 or 80, private sector investments not taking off……you name it. We have ENOUGH reasons to be in cash or in US $. However, in 2029 assuming that the sensex is at 100,000 – you will be wondering what went wrong. YOU will forget that I had asked you to be in cash. You will curse yourself, Whats App, ….etc. and kick yourself. Actually the impact of all this bad news is not so significant that it will DERAIL the economy TOTALLY. Yes there will be some setback somewhere, but something else may boom. ‘Swachha Bharat’ surely raised the demand for sanitary ware, did it not? So many ULIPs may have been mis-sold, but many many people have been paid off for their death claims, have they not been? Look at all the sides of a problem and a solution. ULIPs are also buying equity shares…is that partly responsible for keeping the market at 37k level? Will FII keep selling? what if NS rationalizes the taxation for trusts? she will see reason will she not? Or somebody else in the cabinet will tell her no? The impact of bad news is much less than the scare that the SHRILL voices of the media tell you. ‘Fear makes the Wolf look bigger’ – I am sure you have heard this. It is far easier in jail than what the mind tells you! Relax.

From where will risk come? Well nobody knows it. Not even the biggies. When 9/11 happened the wise man of investing said “we need to be prepared for a nuclear attack by a terrorist group”. Wow. He sounded so genuine. Well, only till you realized that he had ‘Nuclear Insurance policy’ to sell. Oh…so it was not a risk..did you ask?

Well, I know that I don’t understand risk. I have been and will continue to be a student of risk.

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  1. You are mostly a very rational man and ideal money manager for the common man. And I respect you for that. But you are no good with sarcasm.
    In every other article you say WB said we should fear nuclear weapon and his company sells nuclear insurance policy. So what is unusual in that?
    His companies sell everything under the sun – food, phone, banks, clothes, utilities, cards, drinks – what all should he not talk about?
    And by the way the risk of a nuclear attack is not zero

  2. Great post and I like the way you’ve put up your point and five star for your management skills. And the way you’ve represented it so casually it’s just amazing. Good work keep it up.

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