Monday, July 12, 2010

Prudent Investment Engineers!! 11th july 2009

Prudent Investment Engineers!! 11th july 2009
In centuries past , people hearing the rooster crow as the sun came up decided that the crowing caused the sun rise ! . Its silly now!!, but every day experts confuse cause and effect on Dalal & wall street in offering same new explanation for why market goes up or down . When I hear theories like these ,I always remembers the rooster.
If we retrospect , Last 18 Months has been a very turbulent time for economies around the Globe .., the word of recession became part of the life's , all the business tycoons around the world became skeptic about the fundamentals and deferred their business expansion plans with a pessimistic view. Sub prime frenzy derivate instruments finally burst ed the credit bubble .Gigantic monolithic organizations like Lehman Brothers filed for chapter 11 which created credit crunch in the money market which caused the global liquidity squeeze.
Back to home in India , September 2008 was a night mare to the analyst who tracks various domestic economic indicators where Oil was traded at 147 $ per barrel life time high , crazy bunch of folks viz Gold man Sachs was predicted price of crude 250 $ per barrel , Inflation was at 13 % which was 22 years high in India and again same crazy bunch and so called well respected financial Institution were predicted 20 % inflation by the end of Dec' 2008. Economy turned into high interest rate environment to curb the inflation which simultaneously dampens the growth prospects, Indian Economy went through fire in September 2008 , but very few felt the heat .
With in a span of 6 months things were reversed Oil came to south words and traded below of 40 $ , Inflation turned to deflation , and high interest rate environment turned to moderate and major sentimental boost to the economy and to Stock Markets is the victory of Congress led UPA government coming to helm of affairs given a irrational exuberance to the BULLS ..... Some investors and my family friends asked me you track ,sleep & drink stock markets why haven't told us to buy stocks in May so that we could have made some quick bucks ,china eggs , just for the info in the same period our neighboring countries viz Srilanka & Bangladesh markets also given very frenzy returns where the growth is virtually zero . My answer to them is I prefer to have a late delivery baby , rather than a baby in a incubator. If any body want to successful in equity market one should know the rules of the game, Investment in stocks is not a T20 cricket or a one day match , its a marathon , its a process . If you kick a tennis ball to the ground it will raise fast and falls fast , in the same way for Stock Markets also there is no excuse. Extream expectations on the budget led the market to woods but for a rational thinker it paved the way for the tremendous growth prospects for the coming years which will shift India to a fast growing trajectory top on the world growth radar this only single indicator gives a wake up call to the investors .
But if your despondency in mood or you repent having missed the opportunity to invest in Infosys Technologies when it was a small IT company or Unitech when it was struggling to find its feet in the real estate and construction sectors. Or do you lament failing to captalise on the recent rise of stocks don't lose heart. In a fast growing economy like ours, there's always an opportunity to catch small but well-managed companies when they are still cheap, the current down turn in the global economy will give a chance to us to catch such companies in our basket at very cheap valuations so lets ready our fishing nets to hunt future big fishes. Top international financial subsidiaries in India posted better results when their parent companies are reeling under pressure , these are indicative yields of India's domestic story .Rural India is not postponing their new expansion plans unlike the urban India , this is the unique stable growth driver for the economy and the reason to start investing now . If the western countries going into woods means simply feel happy this will reduce the demand for commodities like Crude since every body believes India is a domestic consumption led economy , for FII flows don't worry always good fund flows fallows the good growth this time Indian Investor should sell the stocks to FIIs at a premium wisely . when the global economy is raising at 1.5 % we are projecting a growth rate of 6.5 to 7 % for FY 2010 . I know a professor who teaches about 100 fold and thousand fold returns for prosperity in life which entices me always in the realm of investing the same teaching can be manifested in life if we be disciplined in investing and fallow basic principles rather than trying to catch the tops and bottoms of the market .
In early 1960 to buy a single share Berkshire Hathway Warren buffett's company it cost 7 $ to buy a single share today the same is 85125 $ , 12000 times return in last 49 years, don't think stock are not lottery ticket there is a company attached to every share .If you own good companies that continue to increase their earnings you will do well , U.S corporate profits are up by 55 fold since World war II and U.S stock market up by 60 fold with 4 wars ,10 recessions, 10 U.S Presidents and one impeachment in the same period.
There are 60,000 economists in the US only , many of them employed full time trying to forecast recessions and interest rates and if they could do it successfully twice in a row , they'd all be millionaires by now .Investing in stocks is not a get quick rich program its a process booms and glooms are shades of this process . If one want to make this process fruitful should be diligent doing their home work and prudent in taking investment advises & selecting in Investment Engineers.

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