http://www.etfguide.com/research/226/8/Bulls-or-Bears-Who-Will-Have-The-Last-Laugh?/
and
http://www.etfguide.com/research/227/8/5-Disturbing-Facts-For-The-Bulls/

These articles warn that another big crash is imminent.When i saw the chart for S&P 500 PE ratio, it looks like a Armageddon if it really falls to that level! But i think , the FED and other central banks across the globe will keep printing money to keep the markets high.

The sensex seems to be correcting this week and is back to 16K levels.I think we can start investing in MFs if it becomes 14k levels.Otherwise, best is to follow individual stocks as Yogesh points out in his blog(happionaire blog).

Most of the Yogesh's reports have not done well or posted modest gains .I htink we can wait for a longer period of time to see who is correct.Yogesh still advises gold.

http://new.valueresearchonline.com/story/h2_storyview.asp?str=100872

A good article.It shows how the politician-builder nexus prevented consumer friendly building laws from coming to reality.Very sad state of affairs in India.

Dow 10000

Seems Dow 10000 is far away, according to
http://finance.yahoo.com/news/Why-Dow-10000-Will-Remain-etfguide-3642016142.html?x=0

I was surprised that Indian markets touched 17K.Better to take profits if the markets keep going up without any rhyme or reason.I think the amount of quantitative easing done by various governments are the reason behind this rally.Since, the interest rates are very low in usa, the money cannot be kept in us banks earning less interest rates.They will go into some things like equities or real estate causing another bubble.

My guess is world markets will keep swinging between certain range for next 5 years.It will not touch new highs or break new lows.

Will interest rates in India move up?

http://new.valueresearchonline.com/story/h2_storyview.asp?str=100738

Ritesh Jain thinks so in this article.I guess once you have govt. handing out lot of money in benefits like NREGA scheme etc, the deficit will keep climbing up.The govt has to borrow a lot from banks and private sector will be left with little money to borrow and grow.So, the interest rates will likely go up.Otherwise, the purchasing power of Indian rupee could go down too.

Either way is not going to be good for Indian economy.I guess because of failed monsoons and shortage in food commodities like sugar and dal, the prices of these items will shoot up.This will put a lot of pressure on the govt to control the price.They might increase the interest rates to suck out the money.

Unfortunately, raising interest rates will also be bad for private sector.All in all,, i guess the Indian stock markets are going to go south in 1-2 years timeframe.

King Dollar?

http://finance.yahoo.com/banking-budgeting/article/107605/as-budget-deficit-grows-so-do-doubts-on-dollar.htm

I personally feel that Dollar value will not decrease in the coming decades.America will probably come back very strongly from this recession.Also, i dont see any other currency challenging the $ in the forseeable future.

Mirage in the markets?

A good article in valueresearchonline.com

http://new.valueresearchonline.com/story/h2_storyview.asp?str=100711

The author advises retail investors to use this rally and sell.I have started reading stories of double dip in US related financial magazines.I will take this advice and start reducing my exposure to only few MFs and sell the remaining as much as possible.

US economy hits rock bottom?

If this is true, then the only way is up now!

Read this article from a economics professor at Princeton!

I still have not invested anything additionally in Indian stocks.Yogesh of Happionaire blog fame also recommends not to buy any shares now.He insists on real physical gold

Some 'Home" truths

http://www.moneycontrol.com/india/news/cnbc-tv18-comments/excess-liquidity-intoxicated-realty-sector-deepak-parekh/405643

Anyone watching realty sector in Bangalore, Chennai and other metro cities of India know this truth.Even DINKS(Double Income No Kids) category would keep shuddering at the cost of home prices even though they were in high paying sectors like IT.The realty builders were so arrogant in Bangalore , that one of my friends told me, when he was planning to buy a flat 3 years ago,the builder raised the rate by 10% on weekends when they heard RBI had dropped its interest rates!

Builders like Mantri,Shobha and Purva built huge flat complexes having nearly 200-800 flats and priced each flat at 80lakhs cost(and that was the minimum price for a single unit).Imagine finding nearly 5000 people shelling out 80 lakhs in Bangalore.Did they conduct a market survey before deciding on such prices? even after shelling out such prices, a buyer needs to pay more like registration charges, water and electricity connection bills,vat,service tax etc

Instaed of decreasing the prices, the builders are now trying to postpone their loans to banks or trying to resolve the issue through QIP etc.It will not make much of a dent unless the consumer starts buying and for that, the builders have to decrease their prices.10-20% does not matter and has no effect.It should be atleast 50% now!

I am surprised that Parekh also makes fun of nano housing!

A New Era For Stocks

A very nice article in Yahoo

To summarize, be careful on equities in the near term.I think instead of (100-your current age) allocation in equities, it is better to put 85% in safe instruments and take risk with 15%

As I expected, the budget had nothing much to offer. With the growing fiscal deficit, i did not think the tax rates would be brought down much.I also expected the infrastructure spending and disinvestment of public companies to be on the higher side.It was a disappointment.

The Indian markets crashes a lot as they expected a lot in the budget.If the market crashes below 12K etc, i think it is a good time to re-enter in a small way.

Small is Beautiful

Another good article by Dhirendra Kumar of VaueResearchOnline.com

Please read the article here. It has loads of advice for non-professional investors.

Some important points

• In personal investments, the solution is not to do a lot, but to do only the minimum possible.
• investing in the minimum possible number of securities and by taking the fewest possible actions.
• You should keep all the money that you might possibly need for at least the next five-to-seven years in a safe fixed-income investment.
• Longer term investments should be invested in a small number -- three to four -- of conservatively run equity funds with a good track record.
• The investments in equity should be gradual
• Make a liberal estimate of how much money your family will need if you should fail to wake up tomorrow morning and buy the cheapest term insurance you can find. Do diversify your insurance across LIC and two private insurers

Comments on stock markets

I think Indian stock markets have started retracing their steps.Dhirendra Kumar , writes in valueresearchonline.com that volatality is high.

Dow jones also seems to have struck an invisible barrier and keeps going down or just stalling.The recent World Bank report saying that economic growth will contract more than expected this year will cause the markets to go down more.

Curiously, i saw an ad last week in Bangalore Times Of India newspaper from a big builder saying that as stock markets have risen , the property prices are also going to go up and hence better start booking your flats! what a hypocrisy! Head of LIC MF gave an interview to Business Line of Hindu saying that property prices will not go down any longer.

I take a totally opposite view.In my view, the property prices in cities like Bangalore have risen up so high that they have to stay the same or come down even more.Even software engineers who are primarily blamed for rising property prices cannot take a risk with such prices as their jobs are not assured.So, i guess that the current prices will either stay stable or come down for another 2-3 years.

Oracle vs Sap

http://www.bloomberg.com/apps/news?pid=20601085&sid=a012K7CVKerA

Seems SAP is losing business to Oracle. Larry's strategy of buying a whole lot of small(and sometimes big) companies have helped Oracle to provide a diverse set of products to their customers.

For e.g. the upcoming Oracle Fusion Middleware 11g is supposed to have a lot of applications, some of which are provided free of cost.If any customer starts using a free product like say Oracle Discoverer, a ad-hoc query and BI tool and starts to like it, he/she is not going to buy any specific best of breed applications from other 3rd party vendors.

The maintenance for such applications are covered in the maintenance contract for the whole application suite and hence it is cost effective for companies not to buy new specific best of breed products from other companies.

Stock market thoughts

Stock markets have gone up by nearly 1000 points today and yesterday! I think i will take some dud MF's out of my portfolio using this opportunity.

Will concentrate on a diverse portfolio of MFs but will try to restrict the number of MFs to 5-6.

Only problems is that I do not know whether to reinvest the money in equities.I do feel that the market is overvalued now and will have a major correction within a year.

Budget 2009 thoughts

Read in recent OutlookMoney article that if the Govt of India sells 10% of its stake in Nifty, it can rake in Rs60,000Crore.If it extends this to BSE 200, it can make 100,000CroreRs.

This seems to be one more way for GOI to make money to spend for infrastructure development as the fiscal deficit in India is becoming bigger.This way might be opted if it can't afford another stimulus.

If the GOI does indeed sell stocks to make money, it will try to sell it at higher amounts in which case, it would be good for it if stock markets go up!

We have to await the budget to see what is the direction of our policy makers.I think there might be some dis investment of PSUs announced and more concentration on building infrastructure.

US Dollar - Will it appreciate or depreciate

Investors like Marc Faber, Peter Schiff and Jim Rogers have warned that US Dollar will lose its value a lot because the Fed keeps printing large amount of money. Yogesh Chabria , of Happionaire blog fame, also echoed similar sentiments and advised people to invest in Gold.Yogesh said gold will nearly double in price as people move away from dollar to "safe" instruments like gold.

But today, I saw a conflicting view here . The author argues that Dollar will increase in its value or atleast won't depreciate a lot and that gold will not rise much now.He also warns equities will not be a good investment vehicle as "the worst is yet to come".He is bullish on silver(Jim Rogers also shares this view) though.

Indian stock markets had a big fall yesterday.I think it will trade in some ranges till the budget.But,my personal view now is bearish.I think, this year end or next year, sensex might fall to 10000 levels as the earnings coming out will not be very good.

Black Hamsa?

I named this blog - Black Hamsa which will become translated as Black Swan in English. The Black Swan theory , made famous by Nicholas Taleb's book, says that a lot of happenings in this world were undirected and unpredicted.


In applying this to financial markets, I think there can be both positive black swan events or negative ones.For example, the Indian markets touching 21000 in January 2008 was a positive black swan event as nobody could justify the valuations of the market at that time.


The subsequent crash could be termed as negative black swan event as some analysts were predicting BSE index to rise to 45000.


I think we should try to exploit the positive black swan events to our advantage by making profits to protect against negative black swan events. My brother told me that Taleb recommends 85% of our portfolio in safe debt instruments and only 15% in equity markets.He recommends that we should be prepared to lose all of the 15% in equities but if a positive black swan event happens, make the most of it.


Personally, I missed booking profits at 21K and rued it when my portfolio went into the red by nearly 35%.Now, since the markets are up again, i am trying to take some profits of the table.
I think the sensex is over valued now and believe that it will crash 1 year down the line.

Hello

This is my first post on this blog.I am planning to record my thoughts on economy,financial markets,personal finance and anything related to money on this blog.I am not a expert on any of these topics but just a casual observer.