1)
United States taught the world wrong principle of the relationship between "Inflation and Stock Market" (Dow & S&P 500 in USA and imitated in India for SENSEX and NIFTY)
Americans used to say that " Non-inflationary growth is best for the stock or bond market" and this saying is widely adopted the world over.
This is really astonishing in that so called experts from Nobel Laureate, great mathematicians, analysts, brokers, investment banks, banks, IMF and World Bank etc. never ever questioned this widely held theory or belief, and on the contrary go on using it as "Standard" which is the basic cause of today's problems - credit crisis, hyper inflation, etc
There is nothing like "non-inflationary growth". It is more like "non malignant growth gland called Cancer".
When the country prospers or does not prosper, there is greater need for "money" which is printed by the Central Bank (RBI in India) at the instance of the controlling government. When the money supply is disproportionate to the supply of goods, the inflation results inevitably. More growth means more consumption, more demand less supply so the consequent rise in prices.
The stock market is the ultimate reflection of "inflation". If there is no inflation, the stock market can not simply rise. The basic principle of stock market rise is the "rise in earnings called EPS".
Earnings or profits do not rise if the prices do not rise, and if prices do not rise, the stock market can not rise. Apply this concept in reverse gear - If the stock market rises, there should be greater profit, higher prices for end products, so there is "Inflation"
Having non-inflationary growth is like having "condom se-x" . In that case, there are no more babies, no more growth in a family, no more inflation.
In other words, the growth invariably result in inflation. There is nothing like "non-inflationary growth" America propounded this principle to contain inflation numbers low, so that interest rates do not rise, so their debt-ridden economy can thrive permanently due to lower incidence of interest cost. If American public debt is 13000 billions (13 Trillions), even 1% savings can save its interest expenditure by US$ 130 Billions. Imagine how much did they save by reducing interest rates from high of 6% to low of 2% (spread of 4%) which can save at least US$ 420 Billions?
To me it is amazing that only few "con men" in the FED and Treasury could brainwash the whole world population with dictated belief, by teaching the upcoming graduates at Harvard and other prominent universities the wrong principles of finance.
When something does not work with reference to some standard, one has to assume that the "standard" itself is wrong. The solution lies in abandoning that so called "standard" which by no means is the "gospel of God".
When the people will learn or that I have to learn to conform to the world opinion which does not have even single solution to the present world crisis in Currency, commodity, food prices, property, health care and practically everything that can be translated into money?
A simple example is - Indians are told by experts in RBI that weaker rupee helps Indian economy to help exports and earn FOREX. What about imports? Are we not overpaying due to wrongly engineered depreciation of rupee?
Ever since the independence, for over 60 years, India followed the concept "weak rupee" and allowed it to depreciate from Rs 4/$ to Rs 43/$ today or by 900%. Even when the Oil prices dived to less than $ 10/brl. Indians never saw the petrol or kerosene prices dipping to less than Rs 10/ litre in the market.
III or India's Intelligent Idiots sitting in FM/RBI/SEBI/NSE?BSE, are still adopting this policy in spite of the fact that it does not work. They treat it like a "dictate of Lord Krishna in Geeta". They never changed their basic view that is the basic cause of 11.05% inflation today.
Kalidas, Hong Kong
21-06-2008 (Ref: 09/059)
2)
Reply to calculus on (22-Jun-08 11:04 )
The markets are always efficient - it is the 'market participants or investors' who are inefficient. The markets have 'in built' self regulatory mechanism. Whenever the point of tolerance is reached or breached, the market triggers action to reverse the ongoing course.
Compare the market with a human body, which too have self regulatory mechanism. We eat and drink all days long, pumping in desirable and undesirable food into our belly. The body digests what it wants, rejects the waste next day morning. Whenever we took food beyond body tolerance level, the self regulatory mechanism triggers violent reaction and we suffer either from 'nausea, vomiting or diarrhea'
Compare this with the stock market. Replace 'food' with the stocks, belly with portfolio, desirable and undesirable food with the good or bad stocks, waste with loss, excess intake of food with buying the stocks at any price without thinking , and self regulatory triggered actions with 'steep market fall or correction or crash' whatever adjective you may want to use.
No one dictates market. Markets dictates everyone. Human behavior is rational or irrational depending on the control one has over his mind. It is always easy for the analysts and new reporters or even experts to say ' Market says this, market says that, market says this stock is undervalued or over valued etc' The stark reality is that market never talks to anybody - it just acts or reacts - in perfect rational manner like our human body.
When we fall sick due to wrong intakes, we recover quickly or slowly depending on the kind of food that we took. Markets also behave in same pattern.
The only difference between the market and human is that market never dies, and the human is always mortal. The players change the scene, the market remain same.
I disagree that 'inflation inflicts greater damage on the rich than it does on the poor, although the poor suffer much more due to their limited ability to absorb greater costs'
Inflation is always beneficial so long as it remains within range bound. If there is no inflation, there is no higher price, no incentive to buy or sell any asset. Excessive inflation hurts everybody, less to rich and more to poor, because in inflationary environments, the basic necessities of life goes much dearer, and the poor with limited income source, finds difficult to cope with it. For him, the bread, daal, rice, water and a simple cover, what they call home, is very important. TV, Car, Scooters, Freeze, Computers do not matter much to him.
Most people always engage in 'blame game'. When they are in trouble, they blame fate and go to the temple to complain or seek solace or help.
It is therefore premature to blame the Government for all price rise you see all around. In a global economy, where India is participant, it can not be immune to rise in oil, commodity, and food prices. Deal with it as it comes. Take whatever it takes to control the situation. Actions are more important to solve or resolve the problems rather than blaming like a bureaucrat who try to find a scapegoat for whatever happened.
Kalidas, Hong Kong
23/06/2008 (Ref: 09/060R)
3)
for gs2007
You have to be specific while investing now. The government is likely to raise Petroleum prices soon - second time in quick succession - which may hurt the market (some bulls may say it is discounted).
I would buy battered stocks which were hurt due to rising oil prices such as Refineries (HPCL, BPCL, IOC, RPL), Airline stocks like Jet Airways, Spicejet (in further correction), media stocks like Dish TV, TV Today, Debt free companies like ITC, Hindustan Lever, MTNL (Buy them only in strong correction in SENSEX, like 500 points fall in a day), Gas stocks like IGL, GSPL, Petronet. Speculative stocks like GV Films (Rs 3.65 or about). Avoid pricey real estate and bank stocks (they lose heavily in their bonds investment due to rise in interest rate) IBRetail is another of my pick. Hotel stocks like Taj GVK is one of the best choice, so also Hotel Leela when shot down to Rs 31 or so. I also like GE shipping which has still not fallen below Rs 360 (today at Rs 394) which was first recommended at Rs 330 level by me) Punjlloyd and some tractor companies (farmers will be prosperous due to higher foodgrain prices, that may encourage them to till more land with tractor)
An IPO like Avon Weighing System (Rs 10 IPO price - 45 times oversubscribed and expected EPS Rs 6.50 as I heard - please check this ) which may open between Rs 12 to 16. This is one which I will buy aggressively. If EPS of about 6.5 is true, this stock may go up 300% to 400% in just under one year.
YOu were too early to invest 40% - nothing wrong if you are able to trade your portfolio - I am not that type, so I am still 100% cash)
If oil prices are raised, incidence of subsidy will be less, that may make state owned refineries best bargains. I had sold out HPCL between Rs 257 to 310 earlier - currently at about Rs 189). Worse days of refineries are over, in my opinion, though further fall by about 5% to 8% is not ruled out, if oil prices are not raised.
Future of world is in Gas - almost all vehicles are destined to be converted into Gas (except heavy vehicles). With abundant gas supply having been found, private listed companies like RIL (at Rs 1600 or below), RPL, RNRL (if it does not hold above Rs 80, level of Rs 60 is written all over it).
The situation is still very fluid. Worse is yet to come. What we have seen today is just 15% of damage - more is still in store.
I will not be in hurry to buy the above stocks, except some state owned Refineries stocks, becuase they yield me more than bank interest in dividends. Use my preference as 'Industry preference' and select stocks based on your preference in those industries.
Kalidas, Hong Kong
23-06-2008
4)
for Anand Verma
In a falling market, stay with cash rich Blue Chips like ITC, Hindustan Lever, MTNL etc, because you lose less on them if the market corrections persist.
When the market recovers, the Blue chip recovers first, and after about 2000 points rise, the secondary stocks begin to recover. May be you may miss the bottom prices in those stocks, but important thing is to catch the upward trend.
Please refer to my reply post to gs2007 for more specific comments. I am still 100% cash, but will invest about 15% in next 15 days or so. Worse is still not over yet so far as India is concerned.
Kalidas, Hong Kong
23-06-2008
5)
for sree
If you are 100% cash, begin investing about 15% to 20% into good stocks as mentioned by me in previous reply post to gs2007
Be highly selective, and do not chase. The train is not going to run away because there are number of red signals ahead.
It is difficult for me to advise each boarder's query, Pay attention to what I write generally or specifically. Do not think that I am ignoring any boarder for particular reason - it is just not possible to answer everyone.
Kalidas, Hong Kong
23-06-2008
6)
for bharatnaidu,
MTNL is almost debt free company. It has one of the most balance sheet in the world in the telecom industry. Its true value is not yet reflected in the stock prices. At any time, they may come up with special dividend which may amount to almost 20% of current stock price.
They received also huge tax rebate from IT department. Its true effects are still not felt. The other telecom companies are either bleeding or have very low profit margin. In many companies, the profits are also inflated due to creative accounting.
Every dog has its day. MTNL will also rise all of a sudden and find hundreds of buyers. There was a time when LIC Housing Finance was sitting in a dog house for a long time. I started accumulating from Rs 61 onwards, and look at it now, it is still near Rs 270 or about having seen high of over Rs 380.
Patience is required in large high quality stocks. These stocks are not scraps but invaluable gold. It takes time to shine, but when they do, they glitter over various borders.
Kalidas, Hong Kong
23-06-2008
7)
Refinery stocks react 'inversely' to oil prices. If oil prices go up, the refinery stocks go down because they can not pass on the rise in prices to ultimate consumers as quickly as they can wish due to price control.
Similarly, they go up when the oil prices fall because their margin usually goes up in falling market. They do not pass on cost benefits to consumers as quickly due to price control measures in force.
Other stocks have not been studied by me. Alternative source of energy have been touted by many but these sources do not come even within 10% of their big brother 'Crude Oil'. They are more idealistic buy than realistic. I for one do not even look at these alternatives.
Kalidas, Hong Kong
23-06-2008
8)
for dilip54,
It is (LIC Housing) one of the best stock to own at any price upto Rs 400, so if the current price is well below, the commons sense dictate to buy it and hold.
However, current timing is not so good. Interest rate is biggest enemy for this stock. Right now, due to very high rate of inflation, and prospect of getting even worse, the interest rates in India may go up by at least 2 or 3% points.
This will make all housing finance stock very vulnerable. The loan demand will ebb and withe cost of borrowing rising, the higher loan interest will deter many buyers of new homes in depressing market.
Watch it for a while and try to buy it when the bad news relating interest hit hard. There is no specific level to get into, but I will still wait for some more reaction, to let if fall by another 10% to 15% before even thinking of buying.
Kalidas, Hong Kong'23-06--2008
9)
Reply to novice1000 on (23-Jun-08 22:03 )
Part 1
Firstly, there is nothing like 'scarce land' anywhere. In spite of higher land prices in Mumbai, you will still see patches and patches of empty land from Sion to Thane, Chembur to Belapur and Matunga West to Borivali. Even in USA, which is nearly 10 times the size of India with almost 30% of population, there was never ever dearth of land.
Most land are owned by the government who selectively allocates or sells by auction in controlled price environment. If there are no amenities, existing or proposed, surrounding a piece of land, the developers do not buy such land for development.
Demand of land never gets killed, unless the prices have become prohibitive. Further, it depends on management of land. In a city of Hong Kong, the lands are auctioned bit by bit by the government with a condition that the building project must be completed within 2 or 3 years from the date of auction. This ensures that vital piece of land do not remain vacant and unused. If the bidder does not complete the project within stipulated period, for whatever reasons, the land reverses back to the government. In Hong Kong too, with skyrocketing prices, you will find acres and acres of land everywhere.
Technology brings down the cost due to automation provided the cost of automation is not extraordinarily high. If interest servicing cost of a machine far exceeds the proposed market price level, the automation fails.
No country can flood the other country with cheap goods as easily as you guess. People always want to buy the best quality goods at cheapest possible prices. If manufacturing country does not have efficiency in producing good quality at desirable prices, it just fails.
Mahatma Gandhi even in fifty saw that not everyone can have education or the manufacturing prowess or affordable automation to produce products according to his crafting ability. He promoted the idea of 'handloom textiles' which even today generates maximum employment.
US is the only country who encouraged the handloom sector by importing such textiles or its finished products (like Madras checks) at virtually NIL duty compared to mill made goods. How many Indians ever visit Khadi Bhandar or buy domestically produced handloom goods to support that sector and their own people? not even 2%. Without US support, the entire sector would have been dead because these weavers can not sell their product to their own population nor overseas without pro-active support of country like US
US was able to maintain higher currency exchange rate because the exporting countries always wanted to lower their exchange rates to promote the exports of their commodities. The politicians in India whose corrupt money are lying in Swiss account never wanted Indian exchange rates to improve because they lose out in that case. You can not blame US for lower exchange rates of Indian rupee.
Exchange rate is not the only consideration for product competitiveness. Is not US supplying the world with highest level of quality products despite higher currency rates in the past? It is what product you export, its quality, its demand and its acceptance that determine the overall competitiveness.
China's manipulated exchange rates to generate more employments in job oriented industries like textiles, garments, toys, kitchen equipments and accumulated massive exchange reserve, exceeding US$ 1.67 trillions (5.5 times that of India). It kept the exchange rate steady at about $ 8.38 to dollar for over 10 years. Now that the dollar is plunging and Chinese currency having appreciated to 6.89 or by 18%, it has effectively lost a massive sum of $ 300 Billions, the entire size of Indian FOREX reserve in such manipulative actions. It is not a democracy - they do not answer to anyone.
(contd to part 2)
Kalidas, Hong Kong
24-06-2008
10)
Reply to novice1000 on (23-Jun-08 22:03 )
Part 2 (contd from previous session)
Japan also did the same thing. For over last 15 years, the Japanese kept interest rates near zero to keep the currency low by constantly buying $ from the market from 141 yen/$ onwards to 107 Yen/$ and built up over 1000 Billions of forex reserve in $. Now that $ has dived, they end up losing 24% or massive $ 240 Billions, 75% of India's forex reserve, in just a flash, less than one year.
It is the foolishness of Asian countries like Indian, Japan, China and other South East Asian countries to export their way out by artificially devaluing their currencies to fill the massive consumer demand in USA. You can not blame USA for your own folly. Even today, FM/Commerce Minister/ RBI/SEBI want Indian rupee lower and take all damaging actions like P notes to discourage the FII from buying Indian rupee. They are downright stupid and even more stupid if they blame USA for their own sins.
No country consciously imports or exports recession. There is no way to manage the imports or exports of thousand of items of any country. This is a wrong notion you appear to have, in my humble opinion.
Kalidas, Hong Kong
24-06-2008
11)
for pitquote
During inflationary cycle, the stock prices often overshoot the true valuation in relatively shorter period of time. In deflationary cycle, the stock prices also overshoots on the downside than true valuation in relatively longer period of time. The self regulatory mechanism sets in and reverses the course in both directions.
When the market rises, no one thinks. The government(FM) , central bank (RBI), SEBI, NSE, BSE officials go on distributing sweets and go on drum beating about country's economy, growth, prosperity etc. They tend to become negligent in their supervisory duty as result of which many scandals (like Harshad Mehta, Ketan Parekh) start breeding. A violent reaction results, which forces the Government and other officials to think for the first time what they should do or should have done. All enthusiasm evaporates and 'blame game' starts. Almost all governments in the world are irresponsible in this regard.
Look at the balloon - when it rises, everyone claps, and when it gets higher and higher into thin air, it just bursts. There is no one around at that time.
Look at the pace of rise in BSE. It took years to reach the point of 6000 and then - zoom - goes into stratosphere of 21000 when the people start talking about reaching 45000 in next two years. Insanity takes hold of reasons.
Correction then sets in - reasons find themselves to justify the reaction. If the hopeful people still do not abandon hopes, the correction takes the form of mini or major crash. Money disappears from the scene for a long while. Deflation results and whole prices start working in reverse gear in same manner.
Does it answer your query?
Kalidas, Hong Kong
24-06-2008
12)
for BV
(Avon Weighing System)
Agreed. It is a misrepresentation. Who is concerned for the pre-IPO EPS. The investors would like to know the fully diluted the EPS post-issue.
I think I mentioned that I have not checked the EPS as mentioned in the IPO prospectus. I made a cursory glance at the IPO Application form while I was in Mumbai last month.
I therefore do not think that the issue will be worth investing if the EPS is just 1.53 Many applied for on the basis of misrepresentation. If at IPO stage itself they misrepresent, the company loses the credibility.
Even if the EPS is 1.53, and if we discount by 30%, then the EPS will not be over Rs 1 and therefore the stock is not worth investing unless it falls below Rs 6 in bear market.
The stock will open somewhere around 7th July. I therefore withdraw my recommendation and take off the company from even watch list, as I do not have means to verify other details from Hong Kong.
Thanks for pointing out. MMB needs a keen observer like you.
Kalidas, Hong Kong
28-6-2008
13)
for sahithis,
You are too early to enter both counters. Your loss in RPL may be less, but with RNRL hovering at 60, it may not be to your liking. It is too less to sell at least RNRL. You may sell RPL and use some sales proceeds to buy RNRL at lower price - one RPL may get you 3 RNRL
Oil prices are very much due for massive correction, in one day it may fall by 40% to 50% if right measures are initiated. Current weakness is more due to dumping dollar for which no easy end in sight.
In fact I was very tempted to buy oil sensitive stocks like Airlines and hotels. Jet Airways, Spciejet (Rs 25), Taj GVK, Hotel Leela (below Rs 30), Air Deccan (Rs 60 or about) are some of my picks and I may buy them tomorrow regardless of the market.
I also intend to buy HPCL, BPCL and RNRL if it falls below Rs 47. I also like Textile stocks because Textiles from China is becoming expensive due to 17% rise in Yuan whereas India saw rupee declined by 12%. So Indiam textile sectors benefit from 30% price advantage compated to China - its main competitor. Further, Cotton is due for a major rise - it is the last commodity to rise by at least 1005 that may benefit the cotton textile mills to raise their prices beyond cost.
Do your own exercise in what you should chose. Please note that the current market is only for the brave. US market may see major fall due to failure of broker like Lehman and Merrill lynch and some insurance companies.
I will be putting in only 10% of my money now.
Kalidas, Hong Kong
29-06-2008
14)
Thanks for your offer. Your 3 lines told me the extent of your knowledge. I do not know what kind of training you may be imparting to your students.
I am guided by my own 40 years of experience in banking, stock broking, investments and practically everything in finance. You know the outdated theories which is the main cause of present crisis.
I made over 500% to 800% profit in 18 out of 24 counters in last 5 years. I am also 100% cash liquid and sold everything in January (70%) and March 2008 (30%). I gave a public call to that effect in this forum.
This is the credential I have - what do you have except training the juniors?
And am I a story teller, Yes, I am at some time or other. Generally, I tell stories to my grand children, but having seen too many adults with lower IQ than children, I may be lecturing adults as well in my spare time.
You better learn what is growth, inflation, deflation and stagflation afresh. Old theories do not work nowadays.
Kalidas, Hong Kong
29-06-2008
15)
Reply to Guest on (01-Jul-08 10:45 )
I agree most of your point but will put it different way.
1. The inflation rates is misquoted. One of the index used for many years was Reutoer CRB index. When I left stockbroking business in 2003, this index was 191. Today it is well over 463, giving you inflation by 272 points in 5 years or by 54 points per year or 27% per year. You have to add other components. Considering 3% average interest rates for over 5 years, there was negative interest by 24%, and the market interest rate should have been over 24% - as against 5% today (FED FUNDS Rate is 2%)
2. Agreed that the purpose of lowering rates was to (1) promote Consumer Spending which is used as barometer for growth. (2) Another concept is GDP growth and (3) another phobia is that lower interest rates promote growth.
3. US used non food and non energy as core measure of inflation so that the interest rates do not rise. The food and energy constitute 60% of average family's budget - how can you remove from inflation index to govern the policy decisions?
4. The theory of (1), (2) and (3) no longer apply. They are useless. Japan kept its interest almost ZERO for almost 12 years - and yet there is no growth. Consumer spending on borrowed money always look good, but it ultimately destroys him. GDP growth is measure of only expenditure, not necessarily the measure of growth. When the basic standards are wrong, the best course is to stop using them as standard, otherwise all decision based on these misconepts are wrong.
Today invisible hand is hitting everybody - Japan still does not know after 12 years, what is wrong with economy and who hit them when the NIKKEI crashed from 39000 to 13000 today (down by 67%). Invisible hand also operating behind huge oil move - no one knows the reasons. Invisible hand also destroyed banks through sub prime crisis, and no one knows its origin. The myth is as good as how this planet was created.
In the age of internet, too much information is confusing the minds of all investors. When SENSEX was at 21000, CLSA predicted it will go to 55,000 and today SENSEX has come back to senses - just 13800 with lot more to go.
The reality of the situation is that everyone has turned speculative.They do not want to read reasons.
After long time, I turned buyer and took the view that Oil prices may suddenly crash by $ 40 or more in a single day. This may happen within a month or so. All oil sensitive like refineries, auto, airlines, hotels may go higher. So I bought today, spending just Rs 350,000 in following stocks:
1. Air Deccan @ 60 (Sold earlier over Rs 310)
2. SpiceJet @ 23.5 average (Sold earlier at 84 to 93)
3. GE Shipping @ 338 (Sold earlier at 485)
4. Dish TV @ 28.5 (Sold earlier in 90s to 110)
5. GV Films @ 3.10 (Sold earlier over 8.50)
100% cash holding helped me. I just invested just 2% of may money today, and in meltdown prepared to buy only battered stocks. Yes, the market is in terrible shape and may go down to 6000 predicted in this column long time ago. However, 9200 will be the strongest support.
I want to buy Tata Coffee, BPCL, HPCL, IOC, IBRetail, MTNL, Hind Leverl, Ambuja cement, ITC and other debt free companies, whichever come down more. Even IFCI is attractive at this price. I will stay away from ICICI, HDFC, Axis bank, BOI etc because of their heavy exposure to stock market related lending - they will have increasing level of bad debts.
Kalidas, Hong Kong
1-Jul-2008
16)
for ajay9736
Today's market is more like 20:20 or ODI where the batsman comes with only intention to swing. Either he hits a six or four or gets out.
The Airline stocks plunged heavily due to tremendous rise in oil price. I take the view that Oil is a mass commodity, produced @ 85 Million Barrels per day. It can not be stored easily because it takes lots of space, insurance cost very high due to inflammable character and expensive to transport. If the world just takes holiday for one day, nopt to drive any vehicle, especially on holiday and instead watch movie at home, the prices will crash by minimum $30.
The losses in financial system is so intense, and money have disappeared in trillions of dollars, that the present recession will not justify the oil price above $10, and let me tell you - you will see this price within this range in next 12 months
All commodity prices like Cement, steel, aluminium, copper, zinc, nickel will also collapse by over 80% from current level.
When I feel that the oil prices will collapse, the first stocks that will move up will be Airlines, auto, hotels, refineries, power companies who depend on the oil as main input. the commodities will rise again after forst 6 to 8 months of rise in above industries. There is lag time in metal industry by about 6 to 8 months,because their existing inventories were bought at much higher level, and they find difficult to off load. Many companies will go bust, including TISCO which has contracted heavy load of debts to buy Corus in UK.
You will feel that I am crazy bastard who has wishful thinking. But let me tell you - this scenario is going to emerge. The stock prices may collapse to the extent that many leading stocks will be trading below their par value.
This is the reason that I am buying these sectors. Today, I bought IFCI 2000 shrs at 29.85 and sold at 35.35 within 3 hours. I also IB Retail @81.55 (500 shares); Jet Airways 100 @ 315. I placed others at much lower price which I could not get. But in this market, write down slightly above lower circuit price ( I add up 1% or 2% above circuit price). The reason is that while the index is plunging, you get hit at near lower circuit, and in the event of rebound, at the end of the day, you are already in money. If next day market rebound, you get out with more than sandwich money.
Your specific question whether it is good to buy Deccan at 60: I will ask you counter question - if it was good at 150, why not good at 60? If 150 can go to 310, then why not 60 can go to at least 150?
There comes a time in market collapse, you do not ask questions. You just hit the counter to buy the desirable stocks that have plunged very much.
The stocks like Reliance at 2100 and Larsen & Toubro at 2200 are still not worthy. they will go down to 900 and 600 level in 12 months. Their earnings will be severely dented, unless they use creative accounting. L&T will not do that, but Reliance will do anything to boost its sagging wealth, because Reliance Capital was floated with intent to buy their own stable stocks
Kalidas, Hong Kong
2-7-2008
17)
Reply to small_invester1 on (02-Jul-08 13:56 )
Right now 3 factors are operating against the market:
FIRST FACTOR
Extremely dangerous international market, especially USA and then Europe. The losses of $ 400 Billion is just 5% of total losses. The total losses in banking system is over $ 8 Trillions or $ 8000 Billions of Rs 32,000,000 crores. This money has simple disappeared - not that it got out of some pocket and went out into another. The scenario is so dreadful that I shudder to think the consequences of worst kind. There could be massive job losses that may incite violence. After a while, oil, Commodities, and food prices will collapse - but the people may not have much money left to buy even the cheapest food.
Sometime knowledge becomes a crime. Because I know so much that I am scared to death. Even death will be better than living like a moving flesh.
SECOND FACTOR
India will have its own share of problems. However, India will be relatively less immune. Only high flyers who bought properties at fancy prices, those who thought bad days will never come, will be hit hard.
I was told by one of very good friend in Ghatkopar (I am from that place) that one new developing colony near Vidya Vihar where the process shot up to Rs 9000 per sft, have dropped like a hot potato to Rs 6000 /sft in just under 20 days. New development nearby by one of the best known builder has opened near Rs 6000, but investors feel going down to Rs 4000 in 6 months
Nevertheless, the impact on India will be less, though stocks will suffer massive correction. Almost 6 months ago, when the market went up to 21000, I cautioned that the market will drop to less than 8000 and could be 6000. Everyone laughed. Today, all those who criticized me are pissing in their pants.
THIRD FACTOR
This is political. If there is no nuclear deal, Indian growth rate will come down drastically, its credit rating will be dropped below the investment grade, and all pension funds from USA, who are authorized to invest only in Investment grade country, will leave en masse.
Further, crash in overseas market will make overseas stocks so cheap that the major investors will ditch India and buy in USA for strongest recovery play. India is the last recipient of the funds even today.
Another political factor of Left's support or its withdrawal is a factor that may hurt the stocks. But the political reasons led fall are always better buy opportunities. However, the first two factors take precedence over the third.
So please be stock specific. It is what you buy that is more important then anything else. All yesterday's star may suddenly fall to the dust and old economy stocks with high tech may begin to rise.
Take your own pick, you are in fire, so keep the buckets of water ready. Soak yourself first before venturing into fire. And to reply to your question - whether it is right to time to buy the stock. It is more like asking - Is it right time to eat(Buy) or to go to the toilet (Sell)
Kalidas, Hong Kong
02-07-2008
18)
Reply to Cybergamer,
No one is going to withdraw entire money out of India. FII also includes NRI. We never get any figure the apportionment between FII and NRI
I never base my target based on politicss. that is always a fluid game and will lead you to moving target. I am not that young enough to chase the moving target.
FII reacts to the news. There is nothing to suggest that bottom is reached. If you look into the water, bottom is seen but actual depth is much shallower than you think. Right now, the water is muddy - you can not see anything down there.
My targets are always based on economic fundamentals. I do not even read internal politics.
Kalidas, Hong Kong
2-7-2008
19)
They can't. 80 Mln barrels are produced by various countries many of them are very poor like Venezuella, Algeria, Nigeria, Argentina, Russia and some of its old block,
Further, if they do not pump out, then the slag solidifies. In that case, they have to drill it again which is very expensive.
If they do not sell oil, they can not buy either. They also have huger tankers of their own to whom they feed continuously. Otherwise, their hiring cost goes to waste. they lease the vessels on contract basis.
Agriculture produce are included. these are perishable commodities. If they do not sell Tomato in the morning at Rs 20/Kg, they sell at Rs 6/Kg late at night. It is as simple as that. Farmers never have holding power. They earn every day and live life that way.
Kalidas, Hong Kong
2-7-2008
20)
I do not like these (icici bank and dlf) stocks. They are the dreams of story tellers. Yes, they have huge downside, more than even SENSEX. They still have to go down by 65% minimum from current level.
I think once I mentioned the ICICI level to go down to Rs 180 - I still think it will go there and even lower. It is a hopeless bank.
DLF was extremely overpriced even at the time of issue. I do not think that this stock is worth even Rs 60
Kalidas, Hong Kong
2-7-2008
21)
Reply to small_invester1
He was not waiting to buy. He was just taunting me because ICICI went up after I mentioned it as SALE. Today, it is Rs 575 and will certainly go down the drain. They feel the shortage of money so much that it has for the first time raised Deposit rates significantly. Earlier, they were paying less than other banks.
The shortage of money is just pinching them. Their losses in CDO obligations (which they have not provided in full on the basis of HTL or Hold Till Maturity principle.) Their market value is ZERO and it will never be positive for next 30 years, because all collateral assets have been foreclosed by prime lender and sold to satisfy their debt. Nothing left for derivative holders.
They are just buying time to dispose of these dubious assets to gullible Indian corporates and retail customers later. If they provide for it now, no corporate client will touch it with even remote pole.
Government of India is actively encouraging this 'rogue bank' not to make the provision based on MTM or Mark TO Market rule followed by all the international banks. GOI's intention is not to create panic about this bank so that there is no 'run' on the bank like one during Ketan Parekh affairs.
If they really value their CDO and CDS portfolio on MTM basis, their entire capital would be wiped out (over Rs 40,000 crores). Some clients who purchased dubious Forex derivatives, shows that they are buying time to pass on the dubious assets having zero value. These are all OTC derivatives. In illiquid scenario, one can create 'false market' towards the end of the day to window dress its book.
Kalidas, Hong Kong
3-7-2008
22)
Reply to mokh on (03-Jul-08 10:48 )
This is general advice. If you want specific, give me full break up - qty, purchase prices.
RIL and L&T
They are extremely expensive by any standard. Get out now.
Grasim
I have not studied this stock. However, it looks like it has lot to go down further. Switch to Ambuja Cement (I bought today 500 @71.80) in same sector. Ambuja will be privatized by Holcim of Switzerland who are the controlling shareholders. This swap will return your money faster.
SAIL:
may go down more as correction in Steel is under way. I used to buy it from Rs 5 to Rs 16 (mostly around 7.30 to 8.85) and got out when it reached Rs 80 - then it just shot up and up. It will be better to buy SAIL than TISCO which may go down most in steel sector.
If you have TISCO, swap it to SAIL.
Right now, SAIL is a sale. However, sell only 70% and buy back in correction (Rs 81 to Rs 92) with same money. It depends how much you own SAIL.
Kalidas, Hong Kong
3-7-2008
23)
GRASIM is like a 'Rice Plate' or a 'set lunch'. I prefer a la carte or individual item which can be judged alone. I do not like Kumbh mela
Kalidas, Hong Kong
3-7-2008
24)
25)
Reply to Guest on (03-Jul-08 15:13 ) - Alka
The market will keep going down, though short term rally may happen some time, as it used to happen in the past. This time the short covering rally will be few and far between
Why an I buying? Only a small percentage in select few stocks like State owned refineries (HPCL jumped almost 10% from day low). Airline stocks, Hotel stocks, and few cement stocks (I bought Ambuja Cement today 500 @ 71+)
I bought Airlines and refinery stocks for the reason that they are over depressed due to high oil prices. If any meaningful rally is to come, oil prices will have to drop that may push up the Airline and refinery stocks into the troposphere.
I see the relative strength of the stocks to the market. I bought Spicejet day before which saw lots of buying interest and went against the market.
GE shipping was another strong stock with solid earning and high dividend payout and small P/E ratio
I want to buy Balaji Telefilms, it is cheap, growing, pays over 10% dividend on current market price (not on par value) which is higher than bank interest. Further, it has nothing to do with the oil price. If people do not go out, they sit home and see Kahani Ghar Ghar Ki or Saas bhi...I expect Hollywood invasion into Indian film industry, so I want to expose myself to media stocks like TV today, Balaji Telefilms, and some more (I have to do some research)
Kalidas, Hong Kong
3-7-2008
26)
Reply to Guest
Sell them(GMDC, Hindalco, Nalco, Hindustan Copper) all. There is no shortage. The present rally is only derivative driven. This will not sustain. Historically, you never make money in mining or metal stocks. Last few years are exceptional.
Kalidas, Hong Kong
3-7-2008
27)
Reply to dash.n.crash on (03-Jul-08 22:12 )
Already replied at length on this under TISCO, However, not the following:
- Too much debt
- Bad timing - bought at the height of steel market, British Pound
- Five times the size of TISCO. Tata never had experience to handle such size.
- Unknown pension liabilities of employees agreed in expensive market
- No supply of raw materials for Corus. Present sources insufficient.
- Relied on heavy debt amid debt crisis, rising interest market and falling steel market.
they were all mentioned almost 2 months ago when the stock was near Rs 950 - today less than Rs 656. Right now the price correction due to general market correction. Yesterday's drop of 11.42% was due to soft steel market developing. Real company specific problem will develop in next 12 months. TISCO earning may be more affected by debt load than SAIL
Kalidas, Hong Kong
3-7-2008
28)
SELL(Hind Copper). The world is heading towards worse form of recession that will reduce the demand of copper by 40%. Even when the copper prices rose so much, they never made really good money.
The stock will drop by over 70% in next 7 months - look at TISCO today - dropped over 7%.
I had bought this scrip almost 5 years ago between Rs 48 to Rs 70 and then bought some more at Rs 36. I sold 1000 at little above Rs 400 and balance 1000 below Rs 300 (at Rs 292 or so)
This company has unimaginative management. There are sarkari babus who are wage earners - caring less for investors.
My recommendations are always relative to market and fundamentals. I am usually low price entrant and hold it for over 3 to 5 years. This time frame will not work for long due to crisis. The fundamentals are changing rapidly for the worse.
Metal stocks are the worst stocks to own now, UNLESS some one wants to commit suicide. Better write suicide note before buying this scrip.
Kalidas, Hong Kong
3-7-2008
29)
Reply to Guest (Alka) - for L&T
In India investors chase bonus. In overseas market, bonus is a neutral event. Supposing, a company declared a bonus of 1:1, then the supply of shares is doubled. The Earning Per Share (EPS) is reduced by 50%. The share price has to come down by 50%. In Hong Kong, the stock after bonus or forward split (1 to 2 or similar to Bonus 1:1) instantly start trading at half the price or even below, because the stock will have to go through book closure, that reduces liquidity.
Indian market is therefore very much backward. I therefore do not give any credit for bonus shares. People buy stocks like Reliance because it gives bonus shares, but that company hardly pays good cash dividend.
Coming to dividend, Indian market is extremely backward. In overseas centers, like Hong Kong or USA, the dividend % is measured with reference to current market price or CMP. In India, they refer to as % of par value. If Reliance declared cash dividend of say, Rs 20, then in India, they announce it as 200% dividend, whereas in Hong Kong, we consider it as just 1% (Rs 20 divided by 2000%). If you keep your money in the bank, you get the interest on amount invested (not on par value if any) Similarly, one has to consider the dividend with reference to CMP.
The stock price of L&T went so high that the management declared 1:1 bonus, so that share price may become more affordable to smaller share holders.
In depressed market, this strategy is dangerous. If the stock goes down very much, the people tend to sell the shares by 50%, comforting them that they still have same quantity of shares as before. This is more like ' thappad mar ke gaal lal rakho'
When the Indian market truly matures, it will behave the same way as in overseas markets, and the investors will stop chasing such shares. At that time, people will forget the Reliance, and look upon it for real cash dividend. The shares can be printed by a company as many times as it wish, whereas Cash can be printed only by RBI under predefined fiscal policy.
This is why I consider the stock of RIL and LT as extremely expensive by any international measure. They are fooling you by addressing to your false sentiments.
Look at Reliance Petroleum Ltd. It has not even started production and still trading at Rs 170 plus. Against this, Hindustan Petroleum (HPCL) trading at Rs 180 with 50 years of history pays dividend of Rs 20 per share. Thus, dividend yield comes to 20/180% = 11.1% which is much higher than even bank interest of 10% which is ubject to tax, whereas the dividend is not. Presuming that bank pays 10% and deducts 10% of it towards TDS, the Net Income from bank FD is just Rs 9 0r 9% whereas in HPCL it is 11% 22% higher than bank deposits. Share appreciates, FDRs do not. Even if HPCL does not issue bonus shares, so what, it is what comes to your pocket that counts.
So current yield of 1% in RIL and 11% yield of HPCL - which one you prefer? Only, HPCL if an investor uses common sense.
Take the example of recent public issue Reliance Power which was issued at Rs 450 at the height of the market. There was so much of hype that this issue was oversubscribed several times.
What happened was that during first few days, the promoters themselves arranged for 'fake applications' for thousands of crores of rupees. When the issue was completed, all those applications were rejected because they were not filled in properly as required. Almost 400,000 applications were rejected -or 4 Lakh. Are we to believe that the Indian investors are illiterate that they do not know how to fill in the forms especially while applying for Reliance Power shares?
The prices crashed. Ambani issued bonus shares. The company has not even set up any plant, where is the income, that you are issuing bonus shares. Paper - he printed more shares to the investors. Today the price is equal to Rs 130 (or 208 pre bonus basis) against IPO Rs 450. Maring investors have cost of Rs 650
Kalidas, Hong Kong
5-7-2008
30)
Reply to Guest on (04-Jul-08 08:31 )
1930 and 2008 are not comparable. We are in Internet and Email age whereas 1930 was in snail mail age. Forget 1930.
Does any of the attributes of your father or grandfather or great great grandfather apply to you or your children or grandchildren? No - so forget that kind of comparison - it is for the historians and idiots, not for investors in stock market.
When you have eaten more than enough, your made a sound 'ohia' When you make too much of sound at every 5 minutes you appear to have developed lot of gas which needs anta-acid tablets or else you vomit it out.
Money has disappeared. This will be soon reflected in the prices of everything. Deflation has already started. Look around you (forget oil - these are its last days) - stocks down, bonds down, properties down, you are also down with despair etc. This will spread. When people have no money, the perishable goods either will need to be thrown out or sold at lower price, that is, price deflator is not already active. Even Steel prices have begun to come down. There is no more inflation now. 6 months down the road, you will find everything cheaper, and you will have no money to buy them even at 50% prices than now. This is called 'DEFLATION' or what we say in Hindi - Hava nikal gaya
When people have no money, what those Arabs are going to do? swim in the oil or dump it at less than $10/barrel?
You don't me further. You asked for 'which way' and I showed you. Rest of the journey you have to take it on your own. And also don't ask me silly question - when will it peak out? The troubles are always uninvited villains - they come and go without notice.
Kalidas, Hong Kong
4-7-2008
31)
Reply to no_trader on (04-Jul-08 09:31 )
SELL RIL, ONGC, PNB and do not buy them again until they have dropped by 60% from current level
Retain RCOM. Use some of the sale proceeds of sale from above to buy RCOM - in smaller lots. Retain cash until further fall to buy same counter again
Abhishek Ind - I will buy it below Rs 12, preferably Rs 10 or less. It is not falling because it looks like the promoters are buying. Every one like their own children even if they are spoilt. Abhishek's major exports is to USA - so if US does not buy they suffer unless they sell to Europe or other places.
Buy Spicejet, AirDeccam, Jet Airways - they have bottomed out. Spicejet is up on heavy volume today. GV Films is speculative counter like ODI - It is for play only - no long term investment. Such companies can also disappear.
Buy Balaji Telefilm - I bought some today and hold it for at least 12 months. Any fall is a opportunity to add on. Don't ask me further on same stocks again.
Kalidas, Hong Kong
4-7-2008 (Ref: 09-065)
32)
You write really complicated English that I can not understand. I do not reply such post, but I am making exception.
Mukesh Ambani can dump his shares in the market, even if he knew that the shares will go to Rs 600 (I mentioned Rs 900 for RIL and Rs 600 for LT - read my post properly before jumping to conclusion)
The reason is that large chunk of shares are already pledged to the banks as collateral security for his borrowings for Reliance Retails, Petrol Pumps etc. When I was in India, I saw every petrol pump with name Reliance was closed down. Count how many pumps they have...I wanted to buy one such pump in Amravati, but was told by their employee that they want to lease out only restaurant. I asked him who will come to that restaurant that the pump is closed, so the traffic is NIL to which he replied that - right you are. but this is the company policy.
When the large company or bank have no answer, they take refuge under 'corporate policy'
Similarly, for one retail premises in Nagpur, RIL paid Rs 88 crores (market rumour goes) for Reliance Retails store. Same property changed hands only a few months ago at Rs 12 cores. So, kiske baap ki diwali.
And with regard to my language, I gave fitting reply to tne enquirer. His enquiry had lot of sting in it, so I returned it with interest. I do not keep anything with myself - I just give away
And if you do not like my language, why do you read my post and waste your time? Utilize your time productively. This is the last time I am replying you.
Kalidas, Hong Kong
5-7-2008
33)
for Guest
I do not follow info tech stocks - difficult to understand and we never have verifiable news. I am still an old economy player and focus on those stocks that I understand and have physical assets.
Generally, Info Tech stocks as a class is good to buy for two reasons:
1. Rupee is going down that helps this sector.
2. Their earnings are not determined by oil prices or inflation.
3. They have relatively small volume of debt. Credit crisis don\`t hurt them.
Following are the negatives:
1. FII invest more in this sector. They are sellers now to meet their domestic requirements of margin call or otherwise.
2. Many trade as ADR or GDR or FCCB in overseas market. After BSE closes, if there are bad news of any kind, their overseas trading gets hurt more.
3. They are subject to arbitrage between overseas center and India
Kalidas, Hong Kong
5-7-2008
34)
Reply to miteshshah1
Sensible question. Read the following:
Average median Sub prime loans , say = $250,000
Current cumulative default = 3 Million borrowers
Incremental defaulting borrowers @ 250,000 per month
Defaulting borrowers vs Regular borrowers 10%
Now,
The leveraged derivatives (Primary) created = 6 to 10 times
The leveraged derivatives (Secondary) created = no one knows
Current defaulted Sub prime loans ($) = No. of Borrowers x Average Sub prime loans
= 3 Millions x $250,000 = $750 Billions
Defaulted leveraged derivatives = 750 x 6 = $ 4.5 trillions (6 times)
Defaulted leveraged derivatives = 750 x 10= $7.5 trillions (10 times)
Incremental Sub prime defaulters = 250,000 per month
Incremental Sub prime loans ($) @ $250,000/loan = $62.5 Billions
Incremental leveraged derivatives under default (with Zero value)
= $375 Billions/month (based on Min leveraged ratio of 6 times)
= $625 billions/month (based on 10 times leveraged loans)
In addition to above, many Investment Banks like Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs, Citibank, JP Morgan Chase have created 'tertiary derivatives' based on bunching of some loans carrying same interest rates. Also other derivatives like Credit Default Swaps have also come to the fore. BIS (Bank of International Settlements, Switzerland) mentions that nearly $560 trillions of derivatives are outstanding in the market, but it takes just $14 trillions as possible real exposure (about 2%) on the premise that entire amount may not go into default.
The fact of the matter is that entire Sub prime based derivatives have gone into 100% default. When the prime lender seizes the assets under the foreclosure, he sells it out in the market to satisfy his dues, leaving nothing for subsequent derivative holders.
No that entire $560 trillions as reported by BIS are under trouble. We are taking only limited portion of those derivatives under CDO/CDS/CLM (Collateralized Debt Obligations, Credit Default Swaps, and Credit Linked Notes). CDO are primary form of derivatives whereas CDS and CLN are secondary or tertiary form of derivatives. No one knows the real exposure, because these are OTC (Over The Counter) based derivatives.
IMF's figure of $ 1 trillion is like a ice in water - 1 part above, 9 parts below. IMF is either underestimating it due to lack of knowledge. No one knows today how much? Only I worked out based on pure mathematics and having studied how the sub prime loans and connected derivatives arose and how the default affects the primary, secondary and tertiary derivative holders.
Please note that I have considered only the defaulted parts of the Sub prime loans. Regular mortgaged loans run into several trillions, but who knows how many derivatives have been floated by these Investment banks and other Money center banks.
Also note that the money has simply disappeared into black hole. The bank like ICICI Bank has almost $ 2.6 billions (reported) to $ ? billions more (unreported) CDO/CDS/CLN exposures. Its losses are in my opinion is parked in one of the overseas subsidiary (Canada?). They are not adopting MTM (Mark to Market) rules but HTM (Hold Till Maturity) basis, that is, they will hold it for 30 years. Since the value is ZERO, what makes difference whether they hold it for 6 months or 30 years. The collateral assets have simply disappeared. They must be losing Minimum Rs 11000 crores (reported exposure) to ????? crores (unreported exposures - they consistently dodged this question of their total exposures)
This is the reason I originally predicted that ICICI bank will go down to Rs 180 or less when it was almost over Rs 1100.
I never write non sense - this is not my style. I will not reply to this post even if others have questions. It takes too much time. This post is meant for boarders with advanced knowledge. This may not be understood by even Ordinary Chartered Accountants. It requires very precise and incisive mind.
Kalidas, Hong Kong
6-7-2008
35)
Reply to Buffet777 (6-7-2008)
Right you are. They are all bankrupt and in the coffin. Investors are visiting them paying last respects, garlanding them, throwing flowers on them because they are dead. Had they been alive, they would have got brickbats, rotten eggs and tomatoes, chappals and curses.
Is it the end of financial markets? NO - Market never dies - only the players and surroundings change the scene. Market is a beast for investors who lost money, and God for them who make money.
Excesses will be removed from the system. This is a self correcting process.
The market is immortal whereas human like you and me are mortal participant. Since hindus believe in reincarnation or punar janma, we will be reborn again after 40 years to pick up from where we left. God always give opportunity to relive your life again.
Kalidas, Hong Kong
7-7-2008
36)
Reply to Saranath, (6-7-2008)
Yes, you can ask them under RTI Act so long as those banks are Government owned. RTI Act does not apply to private sector banks.
Yes, you can shoot a question to RBI, which is Government owned, and ask them to list out the exposures of Indian banks individually to all those murky derivatives. But RBI is RBI - they do not listen to enquirer like you. Hell with RTI, will say RBI, we have GOI.
I also believe that even RBI may not be informed by the wrong doers. A criminal never admits crime unless he receives third degree treatment.
RBI will not disclose the names and their exposures in the name of 'public interest' - and you know what that means.
However, serve a notice on RBI under Right to Information Act to both RBI, SEBI, BSE, NSE, ICICI Bank, SBI, Bank of India, Bank of Baroda and all those banks who have branches in USA. Make a text box at the beginning of the letter marked ' NOTICE under Right to Information Act' and serve it on the highest executive by 'Registered Post (not courier) Acknowledgment Due' with a copy sent to them under ordinary post.
Also send a copy of this notice to prominent newspapers like TOI, ET, BS, Financial Express, Hindu, Hindustan Times, and some in Calcutta.
Let us see whether Indian legal system works- it has not for me at least for 21 years.
Kalidas, Hong Kong
7-7-2008
37)
Reply to miteshshah1 (6-7-2008)
Yes and No. Big funds are not big enough to manipulate the giant US market. Some big countries are using those funds to manipulate the system. I can not go further for some reasons that I can not disclose at this stage.
Kalidas, Hong kong
7-7-2008
38)
Reply to peddasai
Do not quote me out of context just to prove your point. Check the date when I first recommended NOCIL (when it was between Rs 25 to Rs 31), it then did double.
I also gave a sale call in Dec 07 to sell 70% of total holding, regardless of names, before 16/1/2008 and the SENSEX dumped by 3000 points in 2 days.
I again SELL call to sell everything, I mean everything, before 31/3/2008
And that my SELL calls did include NOCIL if you understand simple English which I write all the time. If you did not sell, it is your privilege. I am not GOD that I know every boarders\` portfolio or advise them individually. I write for specific stocks with pros and cons. It is upto the boarder who are reading it whether to accept it to throw away in the waste basket that everyone has near his desk.
Now spell Hong Kong properly. Are you jealous that I am in Hong Kong and you could not be here?
Kalidas, Hong Kong
7-7-2008
39)
for the Guest,
Don\`t bluff. I never ever said that NOCIL will not go below 40 fgor 40 years. Cut and paste my quoted texts. Further, I agave a SELL call in December to sell 70% of all stocks before 16/1. At the time the ruling price of NOCIL was around Rs 60 (see the table below) and in Feb 2008, I gave SELL call again to sell every possible stock and remain 100% liquid with cash.
So Mr. Anaami, better avoid spreading rumors of what I said and what I meant. Always quote me in full context. Do not produce two middle lines, leaving top and bottom 5 for your own use, so that readers are misguided.
NOCIL Price Record
Date Open High Low Close Volume Adj. Close
11-Mar-08 23.80 26.50 23.55 26.50 369,300 26.50
10-Mar-08 22.70 24.70 22.70 24.10 565,800 24.10
7-Mar-08 26.50 26.50 25.20 25.20 64,200 25.20
6-Mar-08 26.50 26.50 26.50 26.50 0 26.50
5-Mar-08 26.90 26.90 26.25 26.50 310,200 26.50
4-Mar-08 28.05 30.35 27.60 27.60 234,200 27.60
3-Mar-08 29.30 30.60 29.00 29.05 260,100 29.05
29-Feb-08 31.00 32.00 29.80 30.45 252,900 30.45
28-Feb-08 32.00 32.00 30.50 30.95 194,200 30.95
27-Feb-08 32.40 32.45 30.40 30.95 168,200 30.95
26-Feb-08 31.50 32.00 30.80 31.05 134,000 31.05
25-Feb-08 31.05 32.20 29.50 30.55 182,200 30.55
22-Feb-08 30.75 31.50 30.40 31.00 130,300 31.00
21-Feb-08 32.25 32.90 31.05 31.50 126,900 31.50
20-Feb-08 32.00 32.30 31.05 31.90 125,900 31.90
19-Feb-08 33.50 34.40 32.10 32.55 173,500 32.55
18-Feb-08 34.00 34.45 32.60 33.25 167,000 33.25
7-Jan-08 61.40 61.40 61.40 61.40 331,400 61.40
4-Jan-08 67.95 67.95 64.60 64.60 64.60
3-Jan-08 67.95 67.95 64.95 67.95 704,700 67.95
2-Jan-08 64.75 64.75 58.75 64.75 2,584,90064.75
Kalidas, Hong kong
8-7-2008
1-Jan-08 61.70 61.70 58.00 61.70 1,786,60061.70
40)
What is state owned OMC? Are you referring to Oil Marketing Companies majors like HPCL, BPCL and IOC? If so, I have already mentioned about taking positions into these stocks selling other pricey stocks like Reliance group (both ADAG and MDAG), ONGC group, and Gas companies like GSPL (Gujarat State Petronet Ltd) and Petronet LNG, Indraprastha Gas (IGL) and cash rich companies like ITC, MTNL, Hindustan Lever.
We can not say in crashing market whether they have bottomed out completely. When the margin falls steeply, the margin calls exert lot of pressure on all counters. But, the above stocks are worth buying.
If oil prices go down, and I believe that oil has entered into long consolidation phase with more downside than upside, the above stocks should benefit smartly.
If OMC is not what I deduced, please be specific in your enquiries.
Kalidas, Hong kong
8-7-2008
41)
for A Dandekar (Guest)
Thanks. I bought today HPCL 500 @ 187.65; Air Deccan 500 @ 70.77 (Bought more today, earlier 500 around 60); Balaji Telefims 300 @ 164.65. these shares will be unaffected by oil price rise, whereas if the oil prices come down, then these stocks will move faster than other stocks. -
Kalidas, Hong Kong
8-7-2008
42)
He does not have money. He is slapping himself to keep this cheeks red. I sold Spicejet at 29.20 yesterday (all 4000) that were bought at 24.20 (Avg).
I bought more of Air Deccan, however, and look at Refineries - they have started moving up. Only state owned refineries will do better - private sector may have to wait longer.
I will buy TVS Motor (27.20), Arvind Mill (29 or so), Hotel Leela which may suddenly move higher tomorrow (it just shoots up near the end of the day - so after buying keep sales order at higher price by 14% to 15%.
Dow may correct sharply today. Still major correction is away by 14 days. Enjoy till that time.
Kalidas, Hong Kong
8-7-2008
43)
For Shia,
It is just Cash outlay. I rank all of them alike. If you remember my one of the post, when I asked everyone to sell RIL and buy shares of HPCL, BPCL and IOC in certain ratio.
I do not speculate on political event. These guys do not know anything about finance - they are all buffaloes. Speculating the way you have, I would consider they would experiment with smallest company, that is, HPCL - so my preference.
I did mention that oil prices are due for long phase of consolidation, and Crude Oil has dropped by over $ 9 in 2 days when the likes like Morgan Stanley were predicting $150 by 4th July, and some predicting $ 200 same way, others were predicting SENSEX to 55000 when it was 21000 - and today it is 13400+
I was right in picking up Airline stocks and refineries which may get massive boost today on the back of false rally in Dow. I will be selling everything I bought a few days before, except Jet Airways and Air Deccan (I had bought again yesterday 500 @70.77) These stocks move up in increment of 20% to 30% per day. Jet Airways Chairman Mr. Goyal is, according to me, one of the finest Chief executive in India. He is rationale, intelligent and knows what to do at all times.
You are right - when the stocks in similar industry with similar credentials fall, one that falls steepest may be bought. However, please note that in bear market the people just look at the unit price of the stock - HPCL at 200 is cheaper than BPCL at 252 and IOC over 300.
I am therefore amused that people love Reliance when the state owned giants as above nearly 80% cheaper on valuation basis. Further, the quarrels between brothers will ultimately destroy both ADAG and MDAG groups. Look at the Indian culture and family feuds - all big groups have been destroyed only due to family feuds - Mafatlal, Calico, Nanda group for Escorts, Mody group, Bajaj group (on downhill now), etc and now Ambanis are joining them.
This is the biggest negative for Ambani brothers. Dhirubhai got them educated MBA in USA but did not give them secondary education how to live within family, respect each other, and help each other rather than creating difficulties for them. Such things are never taught in the bueiness schools.
Kalidas, Hong Kong
9-7-2008
44)
for Calculus,
I agree with you. Because we know English, we know of troubles in USA with all those media from Wall Street Journal, Barrons, CNBC, Fox News, CNN, NBC, Bloomberg etc. What do we know about Europe - nothing
70% of credit derivatives have migrated to Europe and Japan, with Europe leading the pack. When the sub prime related troubles arose, FED pumped in $50 Billions and then another $ 100 billions. European Central Bank pumped in over $ 900 billions in 3 tranches. No one read the significance of news well. It will come out slowly and steadily.
Americans are crisis managers. This time around, they simply do not know from where to piack up the thread. They gave almost $ 50 Billions to JPMC and Bear Stearns to save JPMC (not BS). It was reported that JPMC had $10 trillions of derivative exposures through Bear Stearns. If BS was not saved, or it has gone into bankruptcy or wrong hands, JPMC would have collapsed in just one stroke, same way Americans are demolishing old buildings in 3 minutes by planting explosives everywhere so that building collapses in orderly manner.
By merging BS with JPMC, cross entries between them cancelled out each other. Who will pay otherwise $ 50 billions ($ 30 Billions to JPMC directly and $ 19 Billions to BS separately - not many knows this aspect)
So, the market is having orderly fall, as practiced in the demolition of old buildings.
Kalidas, Hong Kong
9-7-2008
45)
for novice1000.
I must say, novice100, you have hit the right spot. This is what the people do not understand.
We are not in inflationary cycle anymore. The deflationary cycle has just started. The money has just disappeared from everywhere. Bonds down, stocks down, properties down, mortgages down and the remaining money from those sectors found ways in commodities and food sector, so they had some rally. Now commodities are deflating too. When there is no money, where these commodities will go except down? there will be no money for constructions or building bridges or roads. Everything is coming down.
The stocks like LT, in normal course, should not trade over 10 to 12 times in normal times, and they are trading at 33 times and that too in severe crisis. This is the reason that I mentioned in one of my post that this stock should come down to Rs 600 (pre-bonus basis)
And you will see that, Indian growth story is almost dead now. We have to think of revival rather than growth. After some time, you will find most of the buildings under constructions left out in the cold and those developers running away in the middle.
The time is such that if one wants to buy the property today, he should buy against ready possession. Ek haath se de, doosre hath se le. Those who book the apartment against future constructions, will be dead in no time.
Look at TATA. He is not getting funding for his Jaguar deal. This is why he wants to raise the money of almost 7000 crores through rights issue at home. He knew at the time of Corus takeover that there were no money in the credit market - why in that case he followed up with Jaguar deal? Those who do not learn from mistakes are stupid, and Ratan Tata has joined this pack - now don't tell me how could I write against Ratan Tata who is one India's best businessman - yes he was but no longer.
Kalidas, Hong Kong
9/7/2008
46)
for Nandan (Guest)
Good question. In normal case, it is so. But we are in abnormal deflationary market. Money running into trillions of dollars have disappeared and getting disappeared too. If there is no money, you can not buy, so price has to come down.
If you have Rs 1000 in your pocket, you can go Taj Mahal hotel to have a coffee. But if you have none in your pocket, you can not have 'cutting tea' from street vendor.
Kalidas, Hong Kong
9-7-2008
47)
for Anmol (Guest)
BSE already crashed, and it will further sink after about 2 weeks. This is a sucker rally. Only today, JPMC economist said 'the credit crisis is to worsen further' while JPMC CEO said 'The crisis will be over soon'. The CEO is in confidence booster mission, having been bribed by FED with $ 30 billions for ad campaign.
Kalidas, Hong KOng
9-7-2008
48)
Reply to intellinvestor on (08-Jul-08 21:01 ),
June quarter just ended. The worst earnings of last quarter will begin to emerge in 14 days when the earning reporting season sets in next 8 days. All hopes for recovery will be dashed.
Indian market was already overpriced so it is coming down faster than Dow. It had overshoot itself based on false hopes, false earning expectations, and too much information about India's growth story, hyper earning projections, and all that nonsense. Reality has begun to down.
In stock market if you want to make money, you have foresee the events at least one month ahead, if not more.You can not say that oil is down by $ 4 so, the market will rally. When the oil doubled or quadrupled, why did not the market come down to 25%? If that theorem did not apply then, why is it applied now?
You have to foresee the trend. When you are in sea, you do not go in just because one wave has receded when tsunami type of wave is building up at a distance.
Next few days, the market may rally. Take the opportunity to sell and if you want to buy, get out before 18/7/2008. Do not buy illiquid stocks, because if the market falls flat, there will be no buyer on illiquid counters just as it happened in January.
Kalildas, Hong Kong
9/7/2008 (Ref: 09-071R)
49)
for kathikn
Never ever count that Stock A has come down from 1200 to 450, so it is cheap. When the DLF came out with IPO, and my broker asked me to subscribe (I never subscribe to new issue) I told him that the stock was not even worth Rs 60. In today's market it is not worth Rs 40.
I do not know other stocks - except that Unitec was bankrupt at one time. We had bought a flat in NRI complex in Navi Mumbai - Unitec was one of the 3 builders who had no money to complete the assignment.
Never trust Developer's stock. Most of the developers are speculators. They drink Opium (OPM or Other People's Money). They never make money anywhere in the world except in Hong Kong, because Hong Kong's developers are cash rich and banks support them and also their customers. I never buy any developer's stock, so never pay any attention.
Kalidas, Hong kOng
9/7/2008
50)
For chintan (guest)
Is it written on the market that it has come down due to inflation and not due to Citibank and Lehman? In January, the market was 12800 for Dow and SENSEX 21000 - today Dow is 11,200 (down 1600) and SENSEX 13,400 (down 7600)excluding yesterday's rally. Do you call it a correction? Citi and Lehman are both trembling like anything - anytime they will collapse. Vikram Pandit may also go soon - many in Citi are not happy with him. And Oil's retreat by $6 or 4% you consider as coming down and markets have fallen by 20% and 35% from top is correction and not crash?
I replied to your points in detailed article in the past. These discounting stories is a bull shit. It is a Bull's propaganda. When the market moved up from 10000 to 21000 on the basis of India's growth story, then the good news were not discounted?
Be a realist and stop day dreaming. You are apt to make mistake. May be you are long on a portfolio with some losses, that gives rise to hopes. But you are betting your hopes in hopeless market. Be careful.
Kalidas, Hong Kong
9-07-08
51)
for ADandekar, Qatar (Guest) - my reply
You are in right stocks. In 3 years time, these stocks will go up by 800% - I have mentioned before 500% when the stocks were 50% higher than today. The current market will rally only if the oil prices come down, and they will. In that case, Refiners get maximum advantage. If O (=Oil) is down R (= refiners) will be up and P (= Producers) will be down. Refiner go up because in falling oil prices, their margin gets wider.
Coming to trading of your stocks to take advantage of rally, there are two approaches. One never bothers about short term movements. They just forget it and do not look at it until the stock has gone within 20% of target price, that is, until the stock has gone to 2000 or about.
If you want to trade during uncertain times, may be you can play with 40% of the stock, retaining 60% as core holding. If the stock doubles, then you may increase your trading stock from 40% to 50%. In trading, after you sell and you are able to buy back with 15% profit, you must buy back. You never get out of cheap stock for too long. Otherwise, you may lose massive rally later.
Good stocks are like having good dogs at your doorstep. They protect you. Once you develop the habit of buying good stocks, these good dogs prevent you from buying bad ones. Dogs are always like that.
Kalidas, Hong kOng
9/7/2008
52)
for Shiva (Reply to 9/7/08)
Gold may skyrocket when the investors' confidence evaporates suddenly, when one major bank officially collapses. (They have collapsed but not admitted yet. It is like a person is dead, but not officially until the Doctor certifies it and official death certificate is issued)
Gold may jump by 10% in one day, when that D-Day arrives. You have to ride those rallies and go on selling (not buying). Right now, Gold is a terrific buy, so is silver.
However, please note the following very carefully:
1. Price of anything is subject to available money supply. If the money supply is increasing without corresponding increase in goods and services, the price rises.
EXAMPLE: Over the last 5 years, due to easy money policy of Greenspan, imitated world over in monkey mouse fashion, overall money supply increased nearly 10 fold (1000%), whereas the supply of goods increased by just 10% to 15%. This is why, the prices of everything - from stocks, bonds, properties, gold, silver, steel, aluminum, copper, zinc, water, oil, gas, electricity have risen. SHOW me which item has not risen. Even unemployment has risen.
2. When Money is destroyed, available supply decreases several fold, and prices of everything that moved up before crashes down to match the reduced money supply level.
EXAMPLE: (Future Scenario)
When over $ 4 trillions have been destroyed (It was mentioned by me in one post how did I arrive at $ 8 trillion derivative exposures) - and I am taking just 50% of carnage, supply of goods have remained same. May be future production may come down, but until the existing costly inventories are depleted, the prices will continue to fall. In such deflationary economy cycle, the prices just drop, and go on dropping, proving all historians and analysts completely wrong, because their chart analysis no longer works and the entire scenario gets into 'uncharted territory'
This appearance and disappearance act of money is the reason for rising and falling prices of everything around you.
This is why when the government try to contract money supply to curb consumption and reduce demand, they issue bonds to withdraw money supply.
But when the Money just disappeared in a giant wave of Tsunami, which is 1000 times more powerful than any government in the world, the prices will just collapse to unbelievable level.
Many boarders who try to ridicule me for my so called 'ego' 'narcissism' elated 'self respect' etc. do not have even 0.1% of knowledge of what I have - and I have proved that over 2 years in this column - but I am immune to their attack. I let them speak out their mind, vomit out the dirt surrounding their logical abilities, so that they can see the truth at least later.
Respect is never demanded, it is always commanded. If 60% of my original posts carry ***** rating, it is due to commanding of respect, not demanding them.
And, as I said before number of times, your opinion is your property, I do not look at them like a true 'vaishnav'
Gandhiji repeated same sentiments of Narsinh Mehta, the coveted saint of Gujarat and uplifter of Harijan (scheduled caste) in his famous poem. 'Vaishnav jan to'
Sam-drishti ne trishna tyaagi
[A Vaishnav sees everything equally, rejects greed and avarice]
Par-stree jene maat re
[Considers some one else's wife/daughter as his mother]
Jivha thaki asatya na bole
[The tongue may get tired, but will never speak lies]
Par-dhan nav jhaale haath re
[Does not even touch someone else's property] Vaishnav...
(Ref: ww-w-.ramanuja.-org/sv/bhakti/archives/all94/0016.-html
remove '-' and then use in browser)
This poem (bhajan) changed the life and built the character of Mahatma Gandhi. He sang it in his ashram every morning and evening to remind him his eternal duties to the mankind. This bhajan gave Independence to India, not Gandhi. But for this poem, Gandhi would not have existed.
Kalidas, Hong Kong
9/7/2008 (09-072R)
53)
for blue violet
I am surprised at such elementary question. The stock which actively trades all the time, with continuous presence of buyers and sellers at all the time. The stock that does not move up or down in upper circuit for number of days (like Hindustan Copper)
I normally use the numbers. If the stock has volume of 1 Millions shares in volume OR Rs 3 crores in value (whichever is higher) EXCLUDING large block trades, as a sign of liquid stock.
Everyone can have their own measure. My measure need not match yours.
Kalidas, Hong Kong
9/7/2008
54)
For pranky
Foxes do not turn into dogs, that you can pet them.
Agreed that Realty sector is emerging sector. But you know very well, any property deal is 60:40 or 60% white and 40% black - may be in some cases, the ratio differs.
So when the prices go up, these developers take the black money first, and when they find that cost of cement and steel has gone up suddenly, they abandon the project and abscond.
I never buy sectors where those industries thrive on black money. Most of profits go into the pockets of Directors - not shareholders.
This is why LT left cement industry. It was not their style. this is why prefer Ambuja Cement and not Chowgle or Birla, because HOLCIM, the Swiss owner, would not indulge into such practices. Tata, Godrej and many Parsi owners of industries avoid this type of accounting, and those industries because if they do not adapt to the market practice, they lose out dearly, as LT found out while owning cement plants (now Ultratech that belongs to Birla - again proves same point - why Birla, why not Tata, Godrej, Mahindara who are all in real estate now)
Kalidas, Hong Kong
9/7/2008
55)
for shubguruact (Reply to 9/7/08)
Honestly, I do not follow powerstocks. In stockmarket, where earnings can be easily judged or worked out, not much excitement is left, so the prices do not move up. Have you heard the song - Choli ke pichhe kya hai-
This is why mineral and metal stocks, power stocks are the items where earnings can be easily worked out and as such they usually trade at very low multiples. It is exception that recent commodity market moved up beyond reasons ( I do have explanation, but it is so long, that I can not discuss here)
As soon as baloon is burst, these very stocks will trade at very low level and may stagnate there for next 20 or 30 years.
Powerstocks you mentioned belong to Government, so they do not face shortage of funds. However, they are ruled by 'puppet executives' under the control of Secrataries in Finance Ministry, Commerce Ministry, Energy Ministry (real name may be different), Coal ministry etc. Further, these stocks are subject to price control and thefts. Go to any village - the villagers and farmers steal the electricity with active participation of concerned Electricity companies. They show them way how to do it. The losses in revenue is passed of as 'loss in transimission'.
If I know that Hindalco makes 500,000 MT of Aluminum. I can work out its possible earnings by using the price inflator or deflator. Further, these metals are subject to heavy forward selling. Manufactuers often hedge themselves 2 to 5 year forward. So when the spot prices start rising, they can not profit themselves, and your all calculations can go wrong.
For example,Barrick Gold and Ashanti Gold forward sold Gold production upto 5 years and were showing good profits. When the gold prices doubled or tripled, they lost extra profit heavily. Barrick Gold had to merge with Placer Gold who had least exposure to future trades.
Newmont mining made the most out of it. They avoided selling forward gold for so long. When the gold prices shot up, they made the fortune.
By looking at balance sheet, you never know what is their exposure to future trades. These are off balance sheet items. This is the problem of today's credit crisis where derivatives have collapsed. there is no change in physical demand or supply.
If you are a human, you can not take more than 10 chapatis, and a car can not consume more than few litres of petrol in a day. Their consumption has not increased by 400% times that warrants the price rise of commodities by 400% or more.
I am already 60+. I do not have luxury to wait for another 30 years to recover my investment. So I avoid. Sometime knowledge is a crime - so we become extraordinarily cautious and let go the opoortunities.
There are thousands of stocks to chose from. Why to go for heped ones?
Kalidas, Hong Kong
10/7/2008
Other manufacturing industries operate under different
56)
Reply to Alka (Guest on (10-Jul-08 16:33 )
You must understand that the market is very volatile. If I tell you today, and the market changes overnight due to fall in Dow, then the facts as well as strategy changes. I therefore do not advice except what I have done.
Right now,
AIR DECCAN - is moving up strongly. It may jump very smartly 20% or more within next 3 or 4 days. Volume has picked up on upside - nearly 8 times than recent low volumes. It is heading towards 120 but it is not a target. When you feel that it is not moving higher, just sell - do not wait in the queue - just sell it in the market.
HOTEL LEELA: Here too I see lot of strength for the last two days. This stock is a dog all through the day and moves up in last 30 minutes or so. So better buy in the morning. It may rise by 15% to 20% from current level. 39 appears top, but would be a seller anything above 37 - today closing price 32.25. It is boring stock for some.
JET AIRWAYS: Already moved up from low base. Bought at 330 or about, today in 4 days at Rs 400. I take the view that oil prices are now consolidating and may not move higher as some say. Iran war is a certainty, but that may not push up the price of oil. Good days of oil are over. so if the oil stays here or goes down, Jet Airways with finest management team in India is the best stock to own. I disregard current losses - it does not take time to change the fortune.
GE Shipping: Best stock to own on a longer term. Disregard any short term movement. Put it on your radar, and buy when you feel like doing so.
GSPL: Best stock in the gas sector. It is not over stripping its parent Petronet. One beauty of gas stock is that it has lowest cost of transportation. Crude oil and heavy material needs lot of energy to pump them out, whereas the Gas moves out without any energy free of cost over very long distance Limited downside - 10% and 20% upside in short term and 30% in medium term. Lower crude oil price will also help and higher oil prices does not hurt it much due to very lost of transportation.
AMBUJA CEMENT: very attractively priced. I bought 2000 between 71 to 72.5- closed up at 79.50 on high volume. Once it crosses 81 and stays above for just 2 days, it may move to 92 level.
RCOM: Bought at 430 or about. Closed at 444 on higher volume. oil prices do not have any effect, but disputes among brothers does.
BALAJI TELE: Good to own. Bought it from 167 to 176, went up to Rs 181. Good to own among media stocks. One remains above 181, sure to go to 230 minimum. Excellent dividend and many foreigners are interested in this successful company
DISH TV: Losing company, but even dead elephant has value. The stock has already seen its low, and I see lot of strength building in. Still need one or two days of consolidation but due for a rise. I bought around 29.85 and still holding. Will sell around Rs 39 to 42 level
HPCL and BPCL: Prefer HPCL at 207 (already up by 10% in last two days from my purchase cost - do not see much downside. In 2 years, sure to see the price of Reliance today (2000+).
Cash Rich ITC, Hindustan Lever and MTNL -in that order are good to own. Buy them when the market is down
TVS Motor: Good to own at 10% below current level. I have placed order to buy 2000 at 25.35, but limit far away.
I do not follow other stocks - so don't ask about them. Make your own research. My plate is full with above selection, and play with them with every up or down movement.
Kalidas, Hong Kong
10/7/2008 (Ref: 09-073R)
57)
for Guest
When you write as Guest, please plave your signature at the bottom of the message, so we know who you are. I do not like to reply for unknown guests. Please note it for your future guidance.
Regarding question, I can only say that you are using simple arithmatic. If one goes down by certain % then other also must go down by same % - it does not work that way.
If a person in a family dies, does not mean that all members of the same family die. Also, if one brother becomes prosperous, does not mean that all brothers become prosperous. If you understand, then you got the reply to your entire message.
Kalidas, Hong kong
10/7/2008
58)
for Kalyanmitta,
Do not misquote me and out of context that India's infrastructure story is dead for 40 years. You better argue quoting your own viewpoints without resorting to my quotes.
Yes, I did mention that India's growth story is dead for now - not for 40 years. Please use cut and paste and quote me verbatim with previous and next paragraph.
Kalidas, Hong Kong'
10/7/2008
59)
for KUD
(For Bush)
The constitution does not permit him. He is outgoing President, and Senate will never agree to guarantee the debt of private corporations. There are so many Senators against the printing of more notes, as seen only yesterday in Senate's hearing of Paulson and Bernanke.
If US does not handle this crisis very well, it may go Soviet Union way. At the moment, it is under financial attack from certain quarters, that i would not amplify here.
Kalidas, Hong Kong
11-07-2208
60)
for pranky
In India, they prepare 4 balance sheets, one for stock market, where they inflate the profit, second for Company Law board, third for Income Tax Department and fourth the real one for the promoters themselves.
When Chidambaran brought in MAT (Minimum Alternative Tax @ 13%) all those companies, from Jain Irrigation to South India Viscose, who were showing huge profits (unrealized but credited to PL in stock market Balance sheets, but to capital reserve in IT balance sheets,) suddenly started showing huge losses to the extent of Rs 100 crores (big for those companies at that time, nowadays everyone talk about thousands of crores).
We are from Hong kong. we know how many developers came here and cheated the Sindhi investors with extra ordinary promises and delivering nothing. Same property were being sold to multiple buyers, because, the property registration takes time, and from the date you bought the property till it is registered, the developer can easily sell it off with clean titles.
We have at least 40 cases where it has happened. One of my close friend, a marwari guy, bought one apartment in Vile Parle and paid almost Rs 50 lakhs. He got the possession nearly 4 years later. This is before the current rally in the property market.
Our judgement is based on our own experience - let the newspaper say anything. That is for you and other facts are for us.
This is why I had suggested that in bad times which are very imminent, one should buy the property only against possession, even if it cost 5% more.
Kalidas, Hong KOng
11-07-2008
61)
for jems000
There is nothing to discuss. I have mentioned in many articles about the false rally in the oil market, but the Investors do not read the way it should be.
Arabs and OPEC have only one intention - Kill the Americans and its economy. This time around they have played the card well - but soon they will be caught - only a matter of time.
Kalidas, Hong Kong
11-07-2008
62)
Reply to bhusbhac
Don't blame neighbors when the problems arise or reside in our own home. The right approach is to identify the problems and take the corrective actions fast.
The inflation has now peaked. Except for some marginal adjustment here or there, it will flatten and may not go down soon, but stabilize with more downward bias. We are in deflation, not inflation any more.
Do not know much about politics of left, right or center. To me both left and BJP are useless. What use of BJP who instead of supporting on vital economic matter like Nuke deal, go on delivering leactures on Ram Janmabhumi and temples. They are no longer nationalist - goddamn opportunist. I have lost faith in their leadership.If they can not set aside the ideological differences and support whoever in power, be they left, Congress or others, they do not deserve the status of a national party, and they do not deserve even a prefix 'Bharatiya' before a national party. By singing Vande Matram, one deos not become a 'bhartiya' or Indian.
Congress is the only government, which in my opinion, could still deliver. BJP, of whom I was keen supporter in my younger days, have deterioated so much, that it needs clean up to the extreme, There was a time, when I compered an event to honour L K Advani in Hong Kong, when I had the impression that he would bring the change. But his style, politics is totally different. If BJP can not support Congress on vital Nuclear issue, they are useless.
Left at least have some ideology to which it steadfastly sticks, right or wrong. You can anticipate what they will do. Same can not be said about others.
Indians no longer depend on their leadership. Indias are no longer adolescent. They have grown up and will manage the country well. India is today on 'auto pilot'. It will move on, on and on. The pity is that of 1.1 billion people, we are not able to get one pace bowler and one true leader. What is wrong with Indian DNA?
Kalidas,Hong Kong
12/7/2008
63)
for shia
I must say that you are smart, and you know well how to read me. But I would not discuss anything here for very strong reasons that I can not divulge. I will inform when the time is ripe.
I would only say that of all persons that I know of, you are the only one who has learnt by intense and intuitive study how to look at the events and how to arrive at the truth. You are marginally right in some of your assessment, but I will not reply where.
I did not discuss the commodity prices like Oil, because most of the players here are petty stock players. If they don't understand, they ridicule or hurl abuses at me. Further, the format of this column is pure text, so I can not present the data that I want to in otherwise html format.
Kalidas, Hong kong
12/7/2008
64)
for Karthikn
Both Fannie mae and Freddie mae were floated with golden intent to provide funds and liquidity mortgage lenders. The lenders used to lend as front man and when they needed more liquidity, they used to sell those loans to Fanni and Freddie.
Both institutions over a period of time, became a vast ocean. All streams, rivers, rivults ultimately converge there. Nothing would have happened to them
In mortgage business, you have Real Estate as prime security. The prices have fallen only 20% at the most - still 80% value is intact. The repayment of loans have already taken care of that 20% downfall.
However, both institutions went beyond its charter and involved themselves into secondary mortgage market. They bought secondary derivatives which should not have been bought by them at all - it is not within their charter. The secondary mortgages do not have prime security of home which was pledged to Prime Lender. If prime lender sells out the prime property, nothing is left for the secondary paper holders.
Both Fannnie and Freddie should not have indulged into the paper derivatives relating to mortgage. The primary lender already had the liquidity. If he wanted more liquidity, he could have transferred the physical assets, that is, home to the Freddie and Fannie - but this was not the case.
Both Fannie and Freddie indulged into paper trading more on the model of a hedge fund without knowing the subject and underlying assets.
Even today, the properties in USA are down only by 20% - my own daughter sold a property for $ 420,000 against what she could have got $480,000 8 months before. She also bought $2 Millions home which was worth about 2.3 millions before. She sold the old home to buy new bigger home. These are the developments of last 2 months only and that too in California near Irvine.
Real Estate never become zero whether it is in Mumbai or New York or in Tanzania. People need home before everything else.
It is only the paper trading that caused the fall. Even nothing wrong with the American mortgage market which is still healthier than the markets of Mumbai. You get excellent property at much less cost than the most expensive property in Mumbai. It is the paper market related to those mortgage which is affected. Ask ICICI Bank that holds $2.4 Billions of worthless paper like the one held by both Fannie and Freddie.
Kalidas, Hong Kong
12-07-2008
65)
for amarawargaonkar
Airlines, Refineries and Auto shares are best bought at the height of Oil prices, thought no one knows how high will they go. To me they have peaked, because deflation has set in - everything going down - stocks, bonds, properties, confidence, currency, etc. with money disappearing, the high end flyers like oil, commodities, gold and silver will also begin to come down very soon.
Only yesterday, a federally insured bank was bankrupt and taken over by regulators.
Yes, it is better to be cautious. the situation is never more scarier than now. With Fannie and Freddie May unfolding, and with every possibility of Lehman brothers going under within 10 days, and last doyen of American strength, General Electric - GE - in serious trouble, the collapse of US equity is imminent. GE has largest exposure of derivatives. It is now going on selling its good assets to finance bad assets.
GE was a company people used to quote it as having best management. It was never so. There was personality cult that was overshadowing its problems for years - they are now unfolding. Once it falls, the entire bond market in US will collapse - they have over $ 200 billions debt outstanding. How much more in 'off balance sheet items' we do not know.
Please note that I have invested very small amount in oil sensitive stocks. If oil goes down, this stocks will at least double in no time. Yes, there is downside - like always in every stock at all the time.
Kalidas, Hong Kong
13/7/2--8
66)
HCL Tech - from software development to Speculation:
Yesterday, the HCL Technology disclosed the massive FOREX losses of $ 65M to $75M(Money contraol news dated 13/7). The company also disclosed that they have overall exposure of $ 2.6 billions or about Rs 11,180 crores.
Otherwise a beautiful and debt free company, how the company indulged into forward FOREX contracts of massive Rs 11,180 crores? The company's sales turnover is Rs 3768 crores, and presuming that the sales tunrs over every 2 months, the average debtors outstanding should not exceed Rs 611 crores. So average FOREX related debt o/s is just Rs 600 crores. How on earth they entered into FOREX contracts for Rs 11,180 crores, nearly 18 times or 1800%?
Are they really FOREX contracts or sub prime related liabilities like CDO or CDS (credit default swaps). It appears that it is mostly so. Look at the other income of Rs 439.42 crores in 2007 (Rs 68 lakhs 2006). Sudden jump in such income suggests that they wrote CDS contracts (to receive the income) which have since gone into default. This is my presumption based on circumstancial eveidence. If that is the case, the entire $ 2.6 billions or Rs 11,180 crores could have no value at all. Which bank sold them these contracts - ICICI Bank?
We have to be careful when we come across the people with lot of cash. I come across many boarders here saying that they are sitting on pile of cash and almost everyday they question whether they should get back into the market.
All InfoTexh companies have lots of cash. How many of them have fallen prey to banks like ICICI Bank, to enter into CDO/CDS related contracts.There is no way such contracts could have been FOREX character only, because once they take the name of CDS or CDO, their shareprices will simply collapse.
HCL management owes explanation to the investors on what basis its so called FOREX exposure amnounted to Rs. 11000 crores, when its revenue does not exceed Rs 3700 crores for full 12 months. The profit of Rs 700 crores (excluding Rs 400 crores of other income), means that should there be a total loss of Rs 11000 crores, it would wipe out its entire equity and generate negative book value. The per share exposure comes to Rs 151 whereas its book value is Rs 51.
It is a fine and superb company. In normal course I would have invested in steep correction (it is still expensive), but we do not know what is inside those FOREX losses.
Indian rupee has hardly fluctuated more than 4% - there could not have been so much of FOREX losses - it must be something else. This is one example, how cash rich Infotech sector is vulnerable. They all trade at very high PE ratio, and if they have deployed funds in above manner, the entire sector needs close watch. If this sector falls, its effect on SENSEX/NIFTY could be substantial. Following table may not be accurately reproduced, but read with care.
HCL Technologies BSE: 532281 NSE: HCLTECH ISIN: INE860A01027
Industry : Computers - Software
Profit & Loss account
-------------------------- in Rs. Cr. ----------------------------
Year Jun '03 Jun '04 Jun '05 Jun '06 Jun '07
Income
Net Sales 871.73 1,127.98 1,447.01 3,032.92 3,768.62
Other Income 88.46 126.21 61.54 0.68 439.42
Total Income 960.19 1,254.19 1,508.55 3,033.60 4,208.04
Net Profit 309.30 325.72 329.27 638.38 1,101.82
Shares/Cr 28.84 29.60 3,192.15 3,234.42 6,636.83
EPS (Rs) 10.72 11.00 10.31 19.74 16.60
BookValue(Rs) 80.23 77.38 89.59 79.64 51.61
Conti. Liab: 29.98 205.15 511.56 331.01 418.65
Kalidas, Hong Kong
13/7/2008
67)
Reply to calculus on (13-Jul-08 11:14 )
I have replied this point number of times. I do not like to repeat it again and again. This is the last time I am rehearsing.
In USA, the primary lender holds the mortgaged assets, and as such he is having first charge on the property. Further, under the rule of foreclosure, the first mortgagee retains all profits and losses (unlike in India, where the borrower is responsible for the balance amount outstanding, if the lender is unable to recover the dues from the property)
Now, the primary lender issued number of derivatives in several trenches (which he should not have done, but he did for lack of proper regulation). Those trenches were secondary mortgagee or holder of Secondary mortgage
When the interest rates were reset on sub prime mortgage at the end of 3 years (usually), the borrower did not want to pay higher rate of interest, and defaulted. The primary lender seized the property and sold it out in the market, with all profits and losses belonging to him. If he loses, he can not sue the borrower. If he gains, the borrowers can not sue him either. Since the finance was 100% of property value, the borrower did not have any stake in the property, so he walked away.
Now, the secondary mortgage holders, who thought that they had the security of the home assets, did not know that the primary lender sold the property to recover the dues. Therefore, the secondary paper holders like (ICICI Bank, and now possibly HCL Technology) do not have any recourse to anyone. They originally thought that they had collateral (under CDO or Collateral Debt Obligations) in the form of mortgaged assets, but there were none.
Since the papers have passed from one holder to another, like a currency note, no single CDO paper holder knows who to approach to locate the primary lender.
So A to B to C to D to E to F .......to AA ..BB...to XX - the papers have changed hands. These papers have ZERO value now, and under no circumstances anyone can recover any amount from anywhere. It is like a 'spider's web'. This is why I used to say - forget ICICI Bank for the time being. They are not telling you the truth.
Latest saga of HCL Tech tells us that many corporates have become the victims of this 'merry go round' papers passed on to them by banks like SBI, ICICI Bank, UBS, Citicorp, JP Morgan, Barclays, HSBC, Deutsche Bank, Bear Stearns, Merril Lynch, Morgan Stanley, Lehman Brothers, Bank of America, Wacovia, Washington Mutual, Society General, Credit Agricloe, BNP, Royal Bank of Scotland - you name it you got it. These banks and investment banks were 'scumbags'. They did not know what they were getting into and what they were selling. They were selling scrap papers at the cost of $100,000 to $ 100 Millions. Do you now understand the gravity of the situation?
This is why I have been saying all along that 'MONEY HAS DISAPPEARED INTO BLACK HOLE AND THAT AMOUNT IS OVER $8 TRILLIONS OR $8000 BILLIONS OR RS. 34,400,000 CRORES OR 27 TIMES INDIA'S FOREIGN EXCHANGE RESERVE' The losses could be even higher - no one knows how many times the derivatives have been issued.
When the value is big ZERO, no value is going to emerge from anywhere. If a dead man can come back alive after 3 years, then this can possibly revive, if you are that optimist. I am a realist and say with my fist banging down on the table - Forget the recovery, forget the growth, forget the hopeless stories from all those experts, who do not have faintest idea of the gravity of the situation. They are dumbheads, and they are telling you what you want to hear - Hey the market has bottomed out, it will recover! And who you are listening to ? Same guys who made this mess?
Kalidas, Hong Kong
13/7/2008
68)
for bubbu64
Long time no see, my friend. I was missing your sharp and witty comments all along. that makes me even sharper.
I am glad that you finally built the dream house. You are right - the workers in India are laziest - be they from Hyderabad or Maharashtra. The only good workers are 'bhaiyyas' from UP and MP.
This is why when boarders were ridiculing China, and boasting Indian can out beat India, they were sadly mistaken. What destroys India is self practiced 'nationalism and patriotism'. I give you two examples of how Chinese people work here in Hong Kong and China
One day, I ordered 'made to order' wall unit about 7'x 7' 18' with many compartments and sections. They made the unit in their factory in just 2 days and came to my home fully disassembled with almost 28 sections, mirror, etc.
In India, how much time will it take to reassemble? It was tedious job with all kinds of leveling, drilling some halls at some places.
There were two people. They took just 7 minutes, cleaned up everything around the place of work, refused even Coco Cola and even tips and went back. 7 minutes, I repeat 7 minutes.
One day, I wanted to have decorative light or Chandler on the ceiling. The worker came, rode the stool, and then asked me to bring the Vacuum cleaner. I said why do you need VC for the ceiling. He said, just bring it, I will show you why?
He then asked me to hold the VC and started it, took the hose and started drilling the hole in the ceiling, keeping hose just next to the shaft. Whatever dirt that was falling down, were sucked into VC and within 10 minutes he completed the installation with no dirt around.
My home in Hong Kong has large windows - 12'x 6' x 3 and other smaller windows almost 6. It was an old building so that old iron windows were to be replaced. It was a massive work - you have to remove the air conditioners from every room, old windows and re plastering the bases. They took the measurement and brought all windows with ultra precision
The workers were only two - A husband and wife. The husband will do all hard work and wife helps with supporting tools etc. He used even ropes to hang outside the wall, 60 feet above ground, and started removing old windows.
You may not believe, In just under 3 days, they completed the full job without any form of dirt leaving behind. They had floored the plastic everywhere so that out wooden flooring do not get damaged.
This is the quality and speed of Chinese workers. Compared to that, I entrusted a job of building greenhouse on my farm - small one just 600 square feet. The contractor, a fabricator, told me he would finish the job in 7 days (In China they take only 1 day) . I paid him advance of Rs 30,000 and he took nearly 11 months to complete the job. Always pleading, I do not have this, or that or labors are not available etc.
I am negotiating with China for a greenhouse of nearly 6000 feet. They said it was a small job for them.They agreed to supply in 7 days, send it out to India, will send their workers and finish the construction in 3 days maximum.
Kahan India Kahan China - Indians still live in dream world. They do not imitate the Chinese precision and efficiency, but that Chinese goods are inferior and cheap. They do not know that many wholesale traders come to Yeewoo in China, hire some godowns, and assemble worn out or export reject goods from everywhere, then put them in 20' or 40' containers, bribe the custom officials, and sell them into the market. If you can not get worst quality of goods, then what you want - A Tajmahal for a price of a dollar?
Anyway, welcome back. When I come to Hyderabad, you will owe me a good cup of tea or coffee. Done?
Kalidas, Hong Kong
69)
for khemraj 2000 (Anil)
RPL is no doubt a good company, but most of the positive news have been discounted in its share price. Othere competitors' shares have declined by 50% to 70%. I would rather sell RPL upto 80% and swap the proceeds into similarly priced similar industry shares such as Essar Oil , Hindustan Petroleum, BPCL and other gas stocks like Petronet, GSPL (Gujarat State Petroleum Ltd).
Punj Llyod appears to be a very good company with massive order flow. Its earnings are also on rise. But it is already in the price. Current earnings are so low compared to share price that I would not buy it at this level. To me it is a good SELL and swap it into other cheaper shares in other industries (this industry has seen lot of hypes) However, during this market correction, if the stock drops by another 35% from current level, then only I would consider the stock worthy enough to buy. Please note that I am respecting very difficult market to lower the price target. The stock certainly deserves better rating in normal circumstances. But we are in very abnormal market situation.
However, please note that Punj Lloyd is a stock which I have followed only for a short time. Please read my opinion with caution and seek other boarders' help in this direction.
Kalidas, Hong Kong
14/7/2008
70)
For shubguruact,
I see your name in my Inbox but when I pressed it, it leads me nowhere, so I could not reply you. Even today, I saw your message of 13/7 but could not locate it. So I went into your mailbox, clicked the outward message from where I got this message.
Everything is important, including technical analysis. But they rely on age old theories that do not work well. Charts do not smell. They may find head and shoulders, but not what is inside the head. Do we apply the theories of stone age? No, we are in internet age.
Even Lord Vishnu, Lord Shiva and Lord Brahma tend to communicate through Intel's Pentium dual core computers. Chitragupta also maintains the record in paperless office manner. Now our Lords have four hands that do not carry Kamal, Trishul, mala or similar items. They carry Mobile phone, IPOD, MP3 or 4 and carry F18 or higher as weapons of mass destructions. Even Haven has changed, why do we talk about this planet with old age theorams?
Books always teach you historical standards. Books are at least 10 year behind the modern state of affairs, because the writer always try to verify, reverify, and re re verify again before writing so that he does not talk nonsense or present non verifiable facts.
Everyone knows fundamentals. It is only when he allows others non verifiable views to impose upoon him, that he commits mistake. I listen to everybody, I watch BBC, Fox News, Bloomberg (my wife used to say, bloomberg machine was my first wife, when I was a stock broker - there is no other machine in the world which is as good as bloomberg - even Chitragupta in the heaven may be wondering about this data machine), CNBC (which go on blabbering CNBC, NBC the first in the business worldwide), Al Jazeera and host of newspaper sites. I try to relate those events and form my own opinion.This is after years of practice. You will be suprised, I am Chemistry and Physics graduate - not finance degree holder, though I did banking diploma and Cost Accountacy later on - but it was science that taught me how to think and analyze.
I may not be able to give you my Email ID at this state. May be after 2 months. Otherwise, I will be flooded with the mails I can not manage, and boarders might think that I am rude and not replying to their mail.
Kalidas, Hong Kong
14/7/2008
71)
for Guest (Singh) 13/7/2008
After a long time, I received a question in a small Para which is very vivid, succinct and present the problems of all middle class in just a few lines, just a poet weaves the contemporary period in a few lines. Accept my heartiest congratulation for putting before me the best ever question ever asked. I do not rate the message, but today, I have rated your message as '5 Star'
The answer is very simple. When you are so intelligent to narrate your difficult life, how could you miss the solution. The solution lies right within your problems.
My father was very intelligent man - studied up to Standard 7 and earning in 1956 just $ 150 per month to take care of entire family of 5 brothers, mu mother and himself. He would get us the new clothes, but for him, he used to wear the same shirt again and again. When the collars gets worn out, he would buy some white long cloth piece, go to the tailor and tell him to replace the old collars with new ones. He would wear the shirt with two different colors - one for collar super white and other rest of the body - yellowish. We could not afford Tenopal the only whitener available at that time.
It was my routine to wake up at 5:00 AM and will force me sit near him - he would apply tobacco powder what you call 'bajar'. Everyday, he would teach me some principles. At that time I did not know what the 'problem' means. He taught me the following:
'Problems are like shadows, they chase you everywhere until they merge into darkness. They look single but bigger one in the morning and evening. You get elongated shadows. When the sun is in the middle (and compare problems with Sun when the heat is intense) at noon time, the shadows are nearly 4 in every direction. That means that if the problem is acute, there are at least 4 solutions.'
So my father taught me and told me to remember for life - ' Problems are like shadows, they always chase you. When the problems are intense, there are at least 10 solutions - just find it and do not ever cry or weep or shed tears over the problems . They are the facts, and they will be history once you find the solution'
When I joined an American Brokerage firm, my mentor Meyer Blinder, a Jew and my General Manager - John Watton - went a bit further and taught me the modified version of same theory which applies to you.
'Do not cut down the expenses when you can increase the income' and 'Whenever you get up early in the morning, cheer up and thank the GOD for keeping you alive, and dress at your best. Also ask your wife and children to look at their best. (looking best does not mean that you must wear expensive clothes. Enough if you wear nice clean clothes) When you begin to like yourself, while posing before the mirror with your lovely wife and children around, you will start respecting yourself, and the whole world will begin to respect you. And when they do, your life changes for good. No matter what where you are.'
My American bosses used to throw pictures of million dollar homes and expensive cars, and ask us which one do we like to own. When we make the selection, he would ask us frame them and instead of praying the God, he would ask us to pray those selected Homes and Cars. Then, he would say, this is your goal, so work for it by breaking bigger goal into smaller ones, and there you are - you got a path illuminated with truth. Just walk down - the world is yours'
So, rediscover yourself. Nothing wrong in cutting expenses. But cut down only those expenses that are not business related. NEVER EVER cut the business oriented vital expenses, which are meant to bring your goods and yourself before the customers. The customers buy what you present them. Be innovative and change your approach. Always go clean shaven (not to grow beards to go to Tirupathi), cheerful, no one bothers or cares for your problems. Your problems are your property - do not pass on to others'
Kalidas, Hong Kong
14/7/2008 (09-080)
72)
for drkhalsa,
The talks about use of Ethanol or Methanol are distracting. There is no point to even discuss this issue. They are not cost effective substitute. There is so much of oil below the ground and under the sea that the current exploration has not touched even 5% of world reserve. You know that on this planet, ocean or water takes 75% of share whereas land assumes just 25%. If you take the proportion of river, the land usage comes to even smaller.
Since water is self balancing, the oil is usually found under water more than on land,. This is why even Reliance found gas on Godavri basin, not on land. ONGC also digs in the sea to get the oil.
The present rise in oil price is derivative driven, not demand or supply driven. It is only transitory. To me, they have peaked, and will not rise further. We are in deflation and when the money has disappeared in trillions, there will be no money to buy after a few months.
I stik my neck out and tell you that within 2 years, you will see the oil prices crashing to $ 10 and then rebounding to $18 to $ 23
If it does not happen, you can sign my death warrant with my consent.
Kalidas, Hong Kong
15/8/08
73)
for karthikn
Irrelevant Question. It is like 'connection out' game, where a bowler tries to run out a batsman with ball on other players' hand and he merely touches the bowler who touches the wicket.
Both F&F mae go under, Dow will be in water above its neck, and by the game of connection out, the markets starting from earliest time zone will begin to cascade down. First Aussie, then New Zealand, then Japan, Singapore, Hong Kong, China, Korea, Taiwan and then arriving in India, Pakistan, Ceylon before heading towards the evening zone like Europe, London and Africa.
The market is like a live wire. Once the electricity passes through, it goes through out the length of wire at the speed of light.
Americans never buy from Japanese banks. They have FED for their needs, and may be Japan may finance by depositing its dollars in US treasury. But direct financing - comepetely ruled out. US is simply too big for them.
Kalidas, Hong Kong
15/7/08
74)
for bharathinaidu,
8% interest is more than enough. World over you get the interest around 1% to 3% - you are lucky, you will be getting more.
Inflation of 11.85% has peaked in my opinion. Inflation is always temporary phenomenon, except at the times of political stability. It does not remain high for number of years - The average rate of inflation for 5 to 7 years will be less than 4% - present rate is one time aberration.
Provident Fund amount is one which one should invest only in interest bearing non speculative Fixed income instruments. When the market collapses, you take out money from PF account and then buy the gem of stocks like HPCL, BPCL, that yield over 10% today with capital appreciation participation. They are the best alternative for PF related savings.
As soon as money is dear, and Government comes out with ZERO coupon bonds (such as Rs 1 Million or Rs 10 lakh bonds, you pay about Rs 27000 to Rs 35000) I made my most money from ZERO Coupon bonds. Even today, I have invested in South African Rand Zero Coupon bonds getting me over 13.5% yield. I bought the bonds at 2.80 and today they are 16 (in 5 years) and Rand appreciated from 12.5 to about 8 today. I have made 800% in little over 5 years. I never buy insurance policies, but invest in government guaranteed bonds. I never buy Corporate bonds even if they are AAA rated. I think you can buy now these kind of bonds with RBI permitting over $100,000 investment overseas.
Soon you will find such bonds in USD in USA. Such ZERO CPN bonds are issued at the time of financial crisis, when it is difficult to raise money by way of regular bonds.
Once I wrote beautiful article on Zero Coupon investing (when I was a stockbroker). That was one of my best write up. I am not able to locate it now. But when I have, I will ask for your email ID and send it to you - that is a promise.( I have to check my old CD to search out the article. If I get a print copy I will scan it and send as PDF file - watch this column)
Kalidas, Hong Kong'
15/7/08
75)
Reply to post of Vivek_dhariwal, My Ref: K9-101
Thanks. I have seriously considered writing a blog. I was just wondering about its format. Right now, I am involved in very important writing project of my life - My Best Ever - that will benefit everyone. It should be over in next 10 days or so.
I wanted to have such format in my blog that I could present the facts with charts and tables. I have reputation (those who knew me in Hong Kong) of being one of the finest presenter. What I write here will be 10 times more effective if I could present the facts in tables and charts and also some pictures.
There are many parts of research that can not be downloaded, So I have to save them as image file (jpg) and then use it in my presentation. I can not do that over here.
A technocrat from WIPRO has offered me to prepare the format for the blog, but I did not have the style ready for him when he offered me the services in this column. Although I am not computer literate officially, I excel a lot in most of the softwares on use and application side. I am not a programmer though.
From tomorrow, whatever I am writing will have reference number. I will also index them in my collection of files. When the blog starts, then those files will be transferred to the blog for easy access.
One simple thing about bonds: Bonds are best bought when the interest rates are at very high level (anything over 12%) and currency at lowest level.
There is Inverse relationship between Interest rates and currency. If currency becomes stronger, the interest rates tend to go down, and when the interest rates do up, the bonds go down.This is why when the Rupee was rising, the rates were falling. When it began to weak, the interest rates in India started rising. This is my own self invented theory and practice. I used to teach them to my investors, some of whom were biggest private investors up to $500 Million investable budget.
ZERO Coupon bonds are usually floated when the government or corporate find difficult to raise money through interest bearing bonds. For example, at the height of FOREX crisis in India, IDBI, SIDBI and ICICI came out with the Zero coupon bonds for the first time in India, I sold them to my investors worth Rs 60 crores in just under one day (Investment amount was just RS 2.5 crores, 60 crores was face value). Under the IDBI scheme, they issued a bond having face value of Rs 10 lakhs, you need to pay only Rs 27000 giving built in yield of 15.5%. The duration was 25 years. This was the best investment tool even for Muslim who normally do not like interest bearing bonds (prohibited under their religion). However, Zero coupon bonds do not fall within the purview of religious practice.
Some other time for discussion on Zero Coupon bonds which will be the savior of all investors at all time at all places in the world.
Kalidas, Hong Kong
Tuesday, July 15, 2008 - 8:16 AM
76)
Reply to Mokh
NABARD or National Agricultural bank for Rrual Development is owned by GOI and RBI. It is a government owned company, It has extremely large balance sheets - 80,000 crores. Makes about 1100 crore profit in 2007. Its capital base is very large and total asset base is over Rs 80000 crores. It is the best bond to buy if you can get it. I do not know whether they are quoted, Contact BSE or NSE debt segment or contact the NABARD directly at the following numbers.
Yes, it is a good buy. All depends on price and availablity. they may be trading at premium
Following are the brief unofficial details of the Bhavishya Nirman bonds ( I could not find the full terms from official prospectus)
QUOTE
Nabard announce Bhavishya Nirman Bonds. -Investment Opportunity.
Nabard announce the Bhavishya Nirman Bonds. This bonds are a 10 year zero coupon bond. The sale price is Rs.8250.00 upto 3 Crore investment and Rs.8200.00 for Rs.3 Crore and above investment. The maturity value is Rs.20,000.00. It carries a ‘AAA’ rating by CRISIL & CARE. The bonds also has the advantage of TAX U/s.2(47) & 2(4 of IT Act. The issue is on tap. Nabard is fully owned by Govt of India and the RBI. This is a very good investment opportunity where the yield is around 12.82%. One more advantage is that the money invested is directly utilised for the development of rural India. More information can be had from,
National Bank for Agriculture and Rural Development,
113/1, Jeevan Prakash Annexe,
J C Road,
PB No.02.
Bangalore-560 002.
Ph:91.80.2222-5248.
Cell:94484-97000.
UNQUOTE
Kalidas, Hong Kong
15/7/2008
77)
for ritchie_mandal
Simple. The structured products do not have any structure. This is the main cause of today's failure. All companies like Bear Stearns, Enron have one thing in common - SIV or Structured Invesment Vehicle which used to sell these products, promising 24% return. If they can make 24%, they do not need customers.
My advise to investors is ' If you do not understand, never buy it.' And never take lunch or dinner with these so called Professional guys. You will feel like parting money to them because they respected you by calling for lunch or dinner at expensive restaurant or hotel.
If you have 1o lakhs and they do not have Rs 10,000, then you are professional, not he. You made Rs 10 lakhs only if you were good at making money. Just because this prefessional wears a blue suit and you a safari or dhoti, does not mean that he is professional and you are not.
Kalidas, Hong kong
16/7/2008
78)
Reply to Guest - Sudipta GT. on (15-Jul-08 22:40 ) (
POINT 1
I am not the only financial experts in the world. There are hundreds, thousands. To you I may be the expert, to others I may be a stupid and to some a Liar as some of the boarders mentioned about me.
Similarly, Finance houses, international brokerage houses have their own standard to which they measure others. If our knowledge do not fit into their firm's established view, then we are not to their standard, and they might underrate us and reject.
Once I was called for an interview at HSBC James Capel Security house, by his President. When I reached there, he showed my resume and said that my secretary brought to me your resume of just 2 pages, and told me that she had never seen a very precise, concise and well presented resume in her life. He said 'When I saw that resume, I concurred with her and decided to meet you in person' Then, he went on describing all the merits of my resume, and for almost 10 minutes, he went on narrating and complementing the each style' I thought I might be hired, but finally he said, Mr. ......, you have extraordinary private clients who are as big as funds. But we need a professional who has experience in dealing with institution. You may be suitable for very high net worth investors (one of whom was his customer with $500 Million budget). I just called you to say 'Thank you and please accept my compliments' He wasted my 45 minutes. What do I do with his compliments?
Further, very large houses do not hire the best talents. The hirer always find his position shakier if he hires a person better than him. It is his job insecurity that finally reject us saying that 'I was over Qualified' I therefore used to work only for a small firm as Independent Contractor only on commission basis, not on fixed salary
POINT 2
I always work with conviction. If I am not convinced, I never write a single word. I do not have allegiance to any firm or country. I align with myself. Further, even I am 100% confident, I can not be expected to win.
What you see today was predicted by me in 1999 under the title 'Bankrupt $'. It was 60 page damning report why did I consider so. I was well respected speaker before Progressive Group which consisted on more than 200 Indian businessmen of high repute. I told them in 2003 that US$ was bankrupt, Gold will go to $ 1200 and USA might become DSA or Divided States of America. I thought that the market was at peak, so I voluntarily retired from that business.
And lo, the market doubled after my leave, and people wondered whether I was right about what I said. They all laughed at me whenever I used to meet them. They all knew that my judgement was always right on spot in the past, but this time around, I was wrong. Today, all those people are calling me for advice to which I politely say NO. They do not know that I am writing on MMB under this nickname 'KALIDAS'
I always narrate the process of my thinking to back up my statement, so that a reader may reject my opinion, if he feels that my thinking process did not agree with his and others.
Yes, I know that dark days are ahead. Only yesterday, one leading analyst who accurately predicted Citibank's plight, said that several hundreds of smaller banks in USA might go under. I disagree, because most of the derivatives have found their way into Europe and UK. This is why UBS suffered most. I also know how to resolve this problem for which not even best of best expert can guide White House or FED. I can not write further than this at this stage for strong personal reasons.
You have same data and knowledge as I have. It is the way you and me read same data, analyze them and present them in proper manner, that is most important. We deal with the facts.
Kalidas, Hong Kong
16/7/2008
79)
for Jasubhai Patel (Guest)
No I did not say that. The problems you see today, are just 5% of what is behind the glass doors. The major troubles are at big money center banks like Citi, JPMorgan Chase, Bank of America, Wacovia, Washington Mutual and Investment Banks like Goldman Sachs (they make up their books and they get inside info from Ex Goldman Chief - Henry Paulson Treasury Secretary and Robert Rubin now Vice Chairman of Citigroup and former naughtiest Treasury Secretary ever.) Lehman, Merrill, Morgan Stanley, UBS, Some Japansese brokerage houses, and China related banks.
Smaller banks in USA are regionally oriented. They may have some problems but not to the extent of biggies.
Right now, US administration takes all wrong actions which make me pessimistic. They take wrong actions because they do not know as yet what has hit them and how.
The troubles with experts is that they are 'specialist'. Am ear specialist, does not know about eyes, or teeth, or longs, heart, kidney and vice versa. In olden days, if you go to your family Doctor, he will just diagnose your disease by looking at you and your pulse. If you go to Doctors today, they need X Ray, Urine, stool and blood samples, ECG even if you have minor skin disease like sores. You have problem on your skin, why do you need all those useless stuff.
Only a generalist like me can see the picture as a whole and present the solution. And I will offer solution to concerned people at my price. Unless and until the US takes actions in right directions, there is chance of a 'Civil War' and USA might go Soviet Union way.
Senior Bush destroyed United States of Soviet Russia (USSR) George Bush Jr, his son, will destroy United States.
Kalidas, Hong Kong
16-7-2008
80)
for small_investor1
No, I did not look for this article. This was a abridged one. The article that I had written was in 1992 or about when IDBI and SIDBI floated India's first ZERO coupon bonds carrying interest yield till maturity of 15.5% and 16% on issue date. These issues did not have recall clause, but it was inserted later on after the issue was over. This way, they cheated the investors.
Sardar Sarovar of Gujarat came out with Zero coupon bonds having yield of nearly 19% without any recall clause. Each Rs 5000 bond was to be repaid at Rs 100,000 after 15 years or so.
Look at the BSE DEBT symbol of 911545 SAR SAROVR-D current Mkt Price 47,181.66 Maturity date is 11/1/2014. Thus, an investor has a gain of Rs 42,181 on his investment of Rs 5000 or 843% on simple interest basis in 9 1/2 years or 89% per year! One of my client invested at my instance just Rs 200,000 or 40 bonds of Rs 5000 each. It is worth 40 x 47,181 = RS 18,87,240 or gain of Rs 16.87,240. I asked him to sell now, but he is not selling. He is telling me that I got him the world's best investment - he had never seen appreciation like this before.
IDBI recalled the Deep Discount Bond @ Rs 120,000 against investment value of Rs 27,000 in 10 years. So investors gained Rs 120,000 - Rs 27,000 = Rs 93,000 or 345% in 10 years or 35% per year on guaranteed basis. (It was Government of India owned)
In my blog, I will put in my original note on Zero Coupon Bonds. It has many tables so they can not be put up here.
IDBI DDB was the first major investment by me. It built up my capital which later on went on multiplying several times. After multiplying my money 5 times in IDBI and SIDBI, I used those proceeds to buy Bank of India @ Rs 10.50 (CMP over Rs 240) IOB @ Rs 10 to Rs 16, and Syndicate bank @ 10.50 only. All gave me magnificent dividend (I recovered my entire investment in 4 years by dividend alone)
The beauty of investing in Government owned PSU is that majority is owned by GOI - often 75% (at that time). Since GOI was having budget deficit, the PSU units will declare liberal dividend because 75% will get into the Government of India's pocket. Since you are also a shareholder, you also get the same benefits.
I sold out my IOB on average price of Rs 56 (highest was Rs 78) Bank of India at just Rs 31 and Syndicate Bank at Rs 87. All Long Term Cpital Gains so NO TAX
So my original money was multiplied by IDBI 5 times and again by PSU banks 8 time, so overall multiplication was 40 times on average. In 15 years, that is, 300% per year on guaranteed basis.
This is called investment. ZERO becomes a HERO. Why should I bother about LIC or Health Insurance if I can multiply my investment 33 times in ZERO coupon in 25 years (IDBI issued bonds of Rs 10 lakhs payable in 25 years against face value of Rs 27000 or nearly 33 times). When you need medical expenses, sell some portion of Zeros and meet your medical bill. Why do we need insurance?
Kalidas, Hong Kong
16/7/2008
81)
for Sarit (Guest)
ICICI direct may be having only stock symbols. They usually trade on NSE whereas these bonds trade on BSE under the symbol already mentioned. They do not trade actively. Give this symbol to ICICI direct by phone and find out the quotes. DO NOT place the market order, because the spread between bid and offer may be high.
If your investment amount is good, contact the NABARD Finance Secretary who might be able to offer bonds under Private Placement or alternatively guide you to buy the bonds from other stock exchange.
Also note that issue prices of the bonds were Rs 8200 or 8300, and current price may be around Rs 8500 or about. There are 3 or 4 series issued in March to May or about, but all are same type. Buy only those which are more liquid.
I have asked my broker to find out the details. I am personally going to buy Rs 200,000 investment value *(Rs 500,000 Face value) as under:
Rs 8500 = 1 Bond = Rs 20,000 Face value
Rs 200,000 = 24 bonds = Rs 480,000 Face value.
Although these bonds do not pay interest, you can sell them on the BSE at any time. They will behave as under:
1. If interest rate same as they are today
-In this case, the bonds will rise @ 12% per year, because one year's interest will be added on its price by the prospective seller, because interest has already accrued. For example, if interest rate remain same as today, after 1 year, they may be theoretically quoted as 8300 (originally issue price in April 2007) x 12% for 1 1/2 years or 8,300 x 18% = Rs 9800 Appx. Since the interest rate is 10% and the bond carries interest of 12%, the issue may trade at premium as Rs 9800 x 12/10 = Rs 11,760. As soon as the maturity date comes nearer, the premium reduce.
2. If interest rates go down
- In this case, the bonds price will go higher than case 1. Say, interest rate dropped by 2%, then the bond prices will be Rs 9800 x 12/8 = Rs 14,700 This is high end. Since the bonds are illiquid, there will be some discount, so the bonds may trade at lower than expected price
3. If interest rates go higher
- In this case, the bond prices may go down. Let us say that interest rate rises by 1%, then applying above case, the bond prices will be Rs 9800 x 12/11 = Rs 10,690
Interest rate is biggest friend or enemy of the bonds. They rise or fall in inverse to interest rate. that is, if IR goes higher, Bonds go lower and if IR goes lower, the bonds go higher.
These kind of losses are only notional, if you want to trade. If you hold till maturity, NABARD is bound to repay @ Rs 20,000 without tax
Effect of Taxation:
Some boarder have mentioned that these bonds may be subject to Capital Gain Tax. I do not think so. These bonds constitute 'Security'. Under the law, if you buy any security from the stock exchange and sell it after one year, the Long Term Capital Gain Tax apply, which is ZERO
It is debatable whether repayment on maturity is equivalent to selling of bonds. To me it is yes, because you sell back the bonds to the issuer. However, to be on safer side, you sell 3 months before maturity - sell to your own family member through stock exchange, so you are not subject to any tax. Any gain is LT Capital Gain Tax. Your family member receives just 3% for 3 remaining months, that is Rs 600 per bond or Rs 14,400 on 24 bonds as per the above example. So it is neither subject to TDS or actual Tax under the law, as Rs 14,400 is too small amount to be added to your regular income. However, you must consult your Chartered Accountant for his professional advice. You should not govern your decision on my representation. It is for basic knowledge only.
Kalidas, Hong Kong
17/7/08 Ref: 09-082R
82)
for whatsUP
Agreed with a qualification. It should be government owned or guaranteed. You can not be sure of Corporation after 10 years whether you will get back the money - their financial position may have changed.
Bonds have recall clause at the time of issue. When the interest rates are low, issuer do not include this clause. If rates are higher they include such clause.
Low coupon bonda are either issued as Convertible Bonds or issued when the general interest rates are low. Other statements accepted.
Kalidas, Hong Kong
17/7/2008
83)
for whatsup,
Good write up. Computers are just beginning to have effect in India, especially CAD/CAM which are the tools to make 'moulds'. The 3D technology has transformed Western world, Japan, and China which is quite adept to use latest technology. I personally use 'Sketch up 6.0' program for my basic needs of floor planning of my new project to build a sports related complex. I am not engineer - this is my hobby.
India with higher computer literacy may take about 7 years to reach the stage that China has reached. then Indian products will begin to have better design, quality and finish, comparable to Western world. Right now, Indian products are not up to world standard except some semi finished raw materials.
This knowledge bank will have automatic expansion. It does not matter which party is in power. These kind of industries are entrepreneur driven.
Kalidas, Hong Kong
17/7/2008
84)
for gv
I never invest in Mutual funds. I invested only once, and regret, in UTI Petro Fund, who are defrauding the investors. I have about Rs 3 Lakhs worth of investment. I invested almost 4 years back, when the Reliance was 330 and ONGC was about same level. Although these stocks have multiplied several times, the Petro Fund appreciated very marginally. Yes, they gave good dividend, but it is nothing to capital appreciation, had I invested in Reliance or ONGC at that time. What these mutual funds do is that when one of their fund is losing money, they transfer the gain from one fund to another, by selling profitable situation to other fund, This being an internal transfer, no one knows it. These fund managers are Bastards. I NEVER EVER TRUST THEM, even if it is Templeton.
In money, there is one undeniable principle. You must be in complete control over your own money - otherwise you lose sooner or later. Even Goddess Lakshmi will say, I wanted to remain with you, but you handed me over to that X guy. So why should I remain with you for ever, when you do not need me. Please note that in the matter of money, only those people betray you whom you trust most.
My case different, because I have financial knowledge. However, I always advise the friends as under:
You must not give 4P or PPPP to others for management.
P = Paisa - that is money - you think that other guy is professional, that is your first mistake. Since you made money in your life in whatever field you are, you are professional.
P = Property - if you give your property to someone in India on rent or management, they will not either vacate it or run away by selling to others.
P = Pen - that is - Ink pen which used to have 'nib' Everyone has a different writing style. If you give your pen to someone, he might break the nib or damage it severely.
P = Patni - that is one's wife - never trust anyone with the precious life partner, Otherwise like Raj Kapoor, you have to sing the song of Sangam ' Dost Dost Na Raha, Pyaar Pyaar Na Raha'
Kalidas, Hong Kong
17/7/2008 Ref: 09-083
85)
Reply Post to: WhatsUP on (17-Jul-08 12:35)
Thread: Inflation and Stock Markets
1. Please realize that there is no substitute of oil today. Alternative source of energy will take at least 20 years.
a. The only cheaper source will be steam (like old days steam engine – but again those steam engine require oil or coal as input)
b. And other is Solar- for which they have to invent a battery which can store powers for 1000 Kms at a stretch. A trucker has a gas tank of about 100 liters which keeps him going for 1000 Kms.
c. Further, oil is consumed @ 85 mbpd or 13.60 billion liters per day. We do not need stationary source like Electric plant. We need “mobile fuel” which can be taken anywhere. We are years, years behind. It is more like inventing an effective drug for cancer.
d. There is enough supply of crude oil stock below the ground and the sea. Almost 1000 time the known reserve. Any waste that goes underground ultimately gets converted into oil due to intense heat of lava below the crust of the earth. With so much of supply around, there is no need to search for alternative source of energy only because we have transitory problem of manipulative shortage due to use of derivatives.
2. RELIANCE: This is becoming increasingly a funny company. Mukesh and Anil sit on the toilet and read daily newspapers what is “catch the word of today”. for “Infrastructure” – create Reliance Infrastructure Ltd.; for “mall”, go for Reliance Retail. For Petroleum, go for RPL; for property, go for Reliance Real Estate; for power, go for Reliance Power; for natural resources, go for RNRL; for movie, go for Reliance Entertainment; for stock market, go for Reliance Capital or Reliance Mutual Fund; for Telecom, go for Reliance Communication Ltd.; and for banking, go for new license for Reliance Banking. If the prostitution is legalized, they might go for Reliance Prostitution Ltd, another RPL. They are just eyeing for any popular term and float the company under that name for that purpose. These are signs of abject failure – you will see after 5 years. There two Ambani brothers will destroy each other in trying to outsmart the other. Those who are investing in this group in spite of so many warning signs. Those who are prepared to pay premium up to 30 times PE when such defocused companies should command only 5 or 6, will be hurt so badly that they will forget investing for lifetime.
3. Who told you India is having largest reserve of coal? It may not be amongst top 5
4. Come what may, US will replenish oil for strategic oil reserve. Even China is imitating US in this regard.
5. You have heard that both US and China are buying lot of steel. Have you heard them importing so much of cement which should be nearly 10 times the consumption of steel? Steel and Cement are brothers and sisters, they go together. If there is really an infrastructure demand, the demand for cement will outstrip the supply of steel by yards. If the demand of only steel persists, where does the steel go? The excess steel is going into building “armaments” – bombs, bullets – that require steel and copper (for bullets). These countries are readying for major war.
6. Oil prices softened because observers feel that US changed the policy towards Iran and will sit in 6 nations meet at Geneva to discuss the nuclear issue. This is a ploy. US is establishing a platform “you see, we did everything to avert war, and even sat with them, but these bearded dumb-heads will not listen to us. We have to pass Security Council resolution to authorize the military actions. IRAN 'Ditto' IRAQ
7. The recent oil pause will be temporary. It will neither fall further nor rise much too. My prediction of $10 per barrel will come true when US takes the right actions. So far their actions are in wrong directions. SELL into rallies. However, go long for Refinery, Airlines, Auto stocks because oil is in consolidation stage.
Kalidas, Hong Kong
Ref: 09R-001 of 7/18/2008 11:29 AM
86)
Reply Post to: Mohnish shah---- (Rajkot) Posted By Guest
Thread: Inflation and Stock Market
While I have replied to questions similar to yours number of times, I find it inconvenient to repeat same again and again. Also, please note that I do not change my views often. However, I am replying out of courtesy:
1. Of course, I meant selling Stocks. No one sells Oil in the stock market, unless you trade in commodities.
2. Yes, it holds for other commodities.
3. of course, you are in deflationary market. In deflation only the prices go down, not up
4. Gold will be the last to fall in deflationary cycle. Gold has confidence value. If the few banks collapse, the people rush for gold. I like silver more than gold, though it is very volatile. Your Rajkot is the main center for silver. Buy the silver bars or ingots not articles. Buy only 9999 silver. It will skyrocket. Buy physical and retain in bank locker. (Take lower rung locker as the metal is very heavy). Expect Silver prices to rise to Rs 60,000/Kg minimum
5. I have mentioned thousand times in this column that we are facing banking crisis. Are you dumb not to notice how much money Citigroup, UBS, HSBC, Royal Bank of Scotland, Barclays, Bank of America, Wacovia, and other investment banks like Merrill, Morgan Stanley, Lehman Brothers etc lost money. Count them in Indian Rupees - $ 1 Billion = Rs 4300 crores
a. Indian banks are relatively safe. I would trust Govt of India owned PSU banks than private banks. Indian PSU banks may not have too much exposure to derivatives except State Bank of India, Bank of India and ICICI Bank. SBI is safe because its Kuber, Govt of India, is the backer.
b. Indian mortgage market is also safe. There are no derivatives here.
c. Except ICICI Bank, all other banks appear to be safe and sound.
Kalidas, Hong Kong
Ref: 09R-102 of 7/18/2008 2:31 PM
87)
or Jasubhai Patel, Baroda. Posted By Guest
It is always difficult to sell at a loss and easy to sell at a profit.
Picking a proper a stock is like picking a good bride for a family. one gets lot of offers, but the Head of the Family, usually a father or mother, scan through the information available for the family, for the girl, the biradari and whether the proposed bride can mingle with your family like a sugar in milk. One takes lot of precaution, and still sometime some bad apple comes into the family, that spoils the mood of entire family.
A good and successful company is not good enough to merit a purchase. One has to consider the price, present circumstances and also the future of the industry and company.
Yes, Reliance and Larsen & Toubro are very good companies. In fact, Reliance took the 20% stake in LT when the Dhirubhai was alive. However, we have to consider their price, the point of entry and point of exit. Japan market was at 38000 almost 16 years ago, but today it is just 13000 or 66% down.
You can adopt the following strategy (for both of them)
1. During current rally, sell only 30% of those stocks that rallied significantly in last few days, say 15% or 20% or whatever. Looks like LT rallied more, so focus on LT first.
Presume that you have 10000 shares of LT @Rs. 3600 or your investment is Rs. 360 lakhs.
- SELL 2000 (20%) during current rally, say at 2450. Do not wait in the queue for long time. If it does not work for 15 minutes, just give away at Bid price.
- SELL 1000 more (10%) if the stock rallies beyond the first sale price of 2450 - say you are getting Rs. 2490 - just sell it on the bid
- Now wait. You realized Rs. 73.90 lakhs before expenses. You have two scenarios - one the stock still goes up further. If it does, SELL another 1000 say Rs. 2585 to get Rs. 25.85 lakhs more
When the market corrects for 3 or 4 days continuously, and LT drops more than 20% from recent top, say Rs. 2000 to 2100, buy back what you sold in same two stages. Say @Rs. 2100 (1000) and @2000 (3800). Use the entire proceeds, so that you get 4800 shares with same sales proceeds without investing fresh amount.
Float with this strategy, so that your cost go on averaging down by itself. NEVER use the method of averages. Treat each transaction as separate deal. for instance, if the stock again goes back to 2350, sell all 4800 + sell some more if it still goes higher. If you take the average cost, the loss will always bite you.
Adopt the same strategy for Reliance. See its levels everyday, where it goes and where it stops.
When the stock gets down to the level I told you, or if the market condition changes suddenly for better with 2 legs up and one leg down for at least 3 times, then you can think of putting in more fresh money.
If you sit out and do nothing, you will not see the return of your money for another 10 years. Please remember, you got into hype, read more newspapers and watched CNBC, but did not use your common sense in buying these extraordinarily expensive scrips.
Consult others before accepting my suggestions. If I were you, I would have done what I just told you. I sold out entire inventory from 22/3 to 28/3 without flinching. I never waited in the queue. I just give away at bid prices if my limit order does not work for at least 2 hours if not 20 minutes.
Do not try to study the market. Always sell in first 15 to 30 minutes in the morning. The stock remains between morning low and high for next 4 hours. Only during last 30 minutes, the market players reverse their bets - if they have sold, they will buy back and they have bought, they will sell.
Between those two periods - morning and evening - do your normal work. Do not glue to the screen. If at all you want, you may leave higher or lower limit orders valid for 4 hours.
Kalidas, Hong Kong
18/7/2008
88)
for Jasubhai Patel Baroda Posted By Guest
Everything is feasible provided the stocks behave as we believe them to. However, what you are asking me is the 'speculation approach' rather than 'investment approach'. Do not be in hurry. If my strategy goes wrong, next day you will come back to me and ask same question other way round.
Just discipliune yourself. Market is an ocean - and it will throw back what you throw in.You have to be present on the shore to collect it.
Kalidas, Hong Kong
18/7/2008
89)
Reply Post to: Vinod Chawla - Guest on (18-Jul-08 13:15 )
Sub: Inflation and Stock Markets
Reg: JP Morgan Chase (JPMC) – This is my preliminary opinion. I will come up with certain numbers later on. The problem was not with Bear Stearns (BS), but with JPMC. JPMC has the highest level of derivatives outstanding as of today. They were reportedly the biggest shorter of Silver, Gold, South African Rand and host of other commodities.
FED can not rescue the JPMC publicly, otherwise the questions would arise about the financial health of the entire banking industry. BS failure came as blessing in disguise to JPMC. If BS was allowed to go to bankruptcy (there is no chapter 11 for financial firms – there is only Chapter 7 – compulsory winding up for them), the bankruptcy court would have published the realizable assets from all debtors, which would have disclosed the name of JPMC leading the pack.
JPMC was being used for many shady transactions by the Administration including LTCM (with Citigroup) and Asian Crisis. They have jumbo bags of non saleable assets. These are being deflected from one hand to other. FED therefore rewarded their loyalty and gave USD 19 Billions to BS and $ 30 billions to JPMC. They took over for just $2/share. When the major investor objected to this deal, they increased it to $ 10/shr overnight. If BS has recoverable assets from JPMC and JPMC has matching liability, the merger will cross of the contra entries, and no one will know anything.
When I left stock broking field, JPMC was having almost $ 30 trillions of derivative outstanding. Since last two years, 2005 to 2007, the derivative positions have increased @ 100% per year for almost all banks. It is anybody’s guess how much outstanding they have under derivatives, as they use Cayman Island subsidiaries to book the contracts, so that they remain outside the balance sheets. To my guess, they must be having $ 60 trillions Minimum or $ 100 trillions maximum outstanding under derivatives.
They also used to lend Gold to hedge funds for shorting into the market. According to one report, they have almost $ 42 billions outstanding for over several years which figure does not move at all. I take the preliminary view that JPMC is near bankruptcy, and all those figures of good performance are nothing but eyewash. They increased their income from investment banking, that is, they used BS position to make the profit. They paid nothing and received every thing from BS. Similar example in India is the take over of Global Trust Bank by Oriental Bank of Commerce where RBI, SEBI, NSE, BSE, FM played all dirty role.
The situation in US is retrievable to maximum extent, if US followed certain strategy which only I know – and I would not disclose it to anyone, including you. I have strong reasons for that.
My remark that – Quote 'Just discipline yourself. Market is an ocean - and it will throw back what you throw in. You have to be present on the shore to collect it.' (spelling mistakes corrected)
This means that –
- One has to have discipline to manage the cash. The most difficult thing to hold is CASH. Everyday, the boarders are asking whether they should invest or not. They have huge temptation without realizing that if they lose Cash at this time, it will never come back or after 15 years at least (when I may not be around). A smart investor is one who invest only when his intellect permits, not when his mind or instinct allow him.
- What you throw into market (money) will ultimately come back. The market is never greedy. Like Ocean, it just returns the investment with interest and capital gain provided you follow the rules of the game. You have to watch the market at all the time – good or bad times.
Kalidas, Hong Kong
Ref: 09R-004 of 7/18/2008 6:05 PM
90)
for KUD
When one has no money, he drinks, quarrels, fights and kills someone. If he has money, he will spend his time and wealth with his family and children.
That applies to US. War is always affordable. War integrates the people of any nation. War is a time when humans do not live in America but in the jungles of Africa to practice the animal instinct - kill and survive.
At the time of war, you justify it by whipping patriotism that our soldiers are dying in Iraq or Iran or Afghanistan. The military generals in Pentagon knows only one thing - Search and Destroy. Rob and Run Away. They do not know a damn about finance and economy. This is what Hitler did; this is what every ruler does.
Kalidas, Hong Kong
18/7/2008
91)
for recession
I do not know much about IT stocks. I never bought any nor intend to buy any in future.
Presuming what you said is true, I can only say that when a company goes bankrupt, it has more IT related work to do - to prepare various returns, debtors, creditors list and their settlement, court's requirements etc. Thus if these banks do go bankrupt, IT sector may have more orders, provided what you say is true - that they have banks as their customers.
Kalidas, Hong Kong
18/7/2008
92)
Reply to:novice1000
Thread: Inflation and Stock Markets
As of 2006, the following were the leading nations producing the coal:
(1) China..................2,620 Mln MT
(2) United States..........1,163 Mln MT
(3) India....................497 Mln MT
(4) Australia................420 Mln MT
(5) Russia...................341 Mln MT (Old USSR = 529 Mln MT)
(6) South Africa.............269 Mln MT
(7) Germany..................223 Mln MT
(8) Indonesia................186 Mln MT
(9) Poland...................171 Mln MT
(10) Kazakhstan.............106 Mln MT
World Total................6.793 Mln MT
Indian Coal is high in ash content, so unsuitable for power plants. It is used in Metallurgy. Russia lost its rank due to its disintegration.
China inspite of larget producer, is still a net importer of coal.
Kalidas, Hong Kong
19/7/2006
93)
Reply Post to: neeguya on (19-Jul-08 09:23)
Thread: Inflation and Stock Markets
No one ever knows exact peak and bottom, and this is why it is called markets. If there were some definitive rules, then no one can make money. An investor makes money due to ignorance of other investor.
The derivative fiasco related to sub prime will extend into 2010 if BIS data are any indication. There are still derivatives extending into 2013, but the proportion is small.
In India, the option and futures market encourages speculation, not hedging. Supposing I have 50 shares of State Bank of India, I can not sell them forward unless I sell one full contract of 132 shares (Rs 170,940 worth @ Rs 1295). So the system so designed by SEBI, NSE and BSE tend to encourage the speculation, whereas they always talk about curbing the speculation like P-Note!
Further, the stock lot of each symbol is different. For SBI, it is 132 shares, for Reliance it is 75 shares, for Ashok Leyland it is 4775 shares.
In USA, the regulations are retail friendly. Each stock lot is of 100 shares only, be it Apple or Sun Microsystems. If one owns 200 shares of Apple, he can sell 200 shares forward or option accordingly. In short, the US market does permit hedging mechanism, and in India despite lot of claims to the contrary, does not.
Nothing has really changed except President Bush’s overtures to Iran and Iraq of late. Is it out of repentance of deliberate design, only time will let us know.
In uncertain times, the Investors do not have to sit on the dead stocks. They have to float with the market with at least 50% of their inventories. Sell them in a rally and buy back with same money (giving higher quantity at lower prices) in correction. When the market’s fundamentals change, then only they should put in fresh money to average down. Until such time, they should average down only by floating with the tide in the market.
The damage to the credit market is so much that the market has no other course except to go down materially. Do not be fooled that bad news have been discounted. I would say that the present market level has discounted all good news.
Think of market going down to 9200 for some support and then to 8000. The present rally is deceptive and gives the opportunity to sell of high flyers like SBI, Reliance, ICICI Bank, LT, TISCO, JSW Steel, etc.
I was right in suggesting buying oil sensitive refinery stocks like HPCL, BPCL (up by 15%) instead of RPL (which has gone down by 12%), Reliance (down 12%) and all stocks in their stable down by 10% to 30%. The best stock to look forward to buy will be LIC Housing Finance. The present rise in interest rates is temporary, may not last over 6 months.
Kalidas, Hong Kong
Ref: 09R-005 of 7/19/2008 2:20 PM
94)
Reply to dilip54 on (19-Jul-08 21:51 )
These are the last increases you see in the market. Inflation is over, deflation has started. Further, LIC never has urge to raise the money. They get the money for free from Insurance policy. LIC is the most liquid institution in India today. May be LICHF is a different company, but they can always fall back on the parents if they need the money at any time. All oil bonds in thousands of crores of rupees are being snapped up by LIC
Current level is the reasonable level to enter. No one knows what happens tomorrow, whether the market will crash or not. There is nothing wrong with the stock as it is. Whether you buy at 230 or 220 or 360, makes no difference to me. My target is 1500 in 3 years if the normal market returns or Rs 600 in bad times such as now.
Indian housing market may see some correction in some centers, but sheer demand at any level will restore the confidence. See how many people marry in November to January and April to June. After marriage, the people do need the houses after 2 or 3 years staying with the parents.
you can afford to wait for reasonable time to buy. But the wait should not be that long as to miss he bus. If my target is Rs 1500 or 750, I do not care whether I paid Rs 230 or Rs 220.
You have to set the buying and selling zone. When the desired zone is reached, you start making purchases in that zone, say 2 or 3 times at different prices. Similarly, when the stock reaches 30% within your target selling price, and enters the selling zone (normally 20% within target price), you begin to sell in 2 or 3 stages most, if you want to benefit in bull market or higher momentum play. However, if the stock wavers, just sell it in the market at bid prices - what makes the difference if you got 750 or 730 so long as it is above Rs 230 now?
Further, I am in Hong Kong and have different thoughts of transferring assets to my children. I got them educated upto MBA, and sent them USA. It is for them to prove their talents. How long we could go on hand spooning them with milk and water?
My father did not pass on any heritage to me but gave me very practical education. that was my heritage. I made it up to come to Hong Kong and make my life. My children are more fortunate that they got a father who gave them so much. They have to cut out the career on their own and build the assets much more than I did. Otherwise what is the point of their doing MBA spending almost a crore of rupee after them?
Everyone comes to this world with his fate pre-written upto 40% by vidhaata. Rest of 60% is to be written by the person himself. Otherwise, he should have borne as an 'animal or insect', not human being.
Do not be that over protective of your children. Let them become independent on their own. Even if you give them everything, do you have guarantee that your son will take care of you in old days as much as you did for him in his younger days?
Kalidas, Hong Kong
20/7/08
95)
Reply to Srinivas (shri99 on (19-Jul-08 23:02 )
LIC Hsg Finance is the best stock you can own at any time. This stock has potential to rise upto 7 times than current value in 2 years in normal market, and at least treble in 2 years in the kind of market that we are facing today. Forget all that pay commission etc. It does not have major effect on the finances. Employees finances generally take 4% cost max in mnufacturing and at the most 10% in service industry. Anything above that level is the first sign of improper administration.
Gold woul have gone to $ 2000 - I agree. But the extent of 'money loss' is so much that it will also crash if the depression sets in. In depression, like of 1930, the people do not have money at all. The price of any asset is always relative to availability of money supply. When the trillions of dollars have disappeared, where is the question of any asset going up to the level you mentioned.
For the moment, the Gold may move up, somewhat but not exceeding 10% (my original target was $1500 but I don't think it would be achieved). Gold rises in War and Inflation or hyper money supply. There is no third World War now nor there is any inflation - deflation has just started. The inflation numbers you see are all now histroy. Next 6 months figures will bring down the inflation to single digit. Unless monsoon fails.
Kalidas, Hong Kong
20/7/2008
96)
Reply to WhatsUP (19/7/08)
I don't understand. What are you going to do with the hideen reserve? What comes out is very important. If what you say is true, why Ratan Tata is flying around Australia and South Africa in search of coal mines (recently bought one in south Africa) and Iron ores?
Is he unaware that India is having second largest reserve of coal of the type you mentioned?
It is not important how much coal you have below the ground. It is the cost of extraction, availability of power, labour and water that is more important for digging the coal out. Methane gas is the biggst deterrent to coal digging. Hundreds of coal miners get trapped in mines and either bury themselves or get blown out below the ground.
The best non pollutive power source is hydro-electric, like the one Tata Power has in Khapoli that runs the entire Bombay's lifeline suburban trains and electricity supply for the city.
Kalidas, Hong Kong
20/7/2008
97)
Reply to googol on (20-Jul-08 19:16 )
Thread: Inflation and Stock Markets Reg: LIC Hsg Finance
Your approach is by books. You should have taken last 3 years for measurement when the Housing Loan finance just picked up. Since you are counting last 5 years, your growth multiple gets understated.
See the following figures:
Profit & Loss account -------------------.......... in Rs. Cr.
..............................Mar '05...Mar '06...Mar '07...Mar '08
Total Income..................1,048.42..1,273.37..1,588.08..2,183.08
Profit Before Tax...............204.30....263.86....353.17... 531.71
Tax...............................52.06....50.90.....74.76....145.11
Profit after Tax.................143.72....208.57....279.15...387.19
Absolute Increase in Profit.................64.85.....70.58...108.04
EPS................................16.92....24.56.....32.87....45.59
Profit Growth..............................45.13%....33.84%....38.70%
Now, watch the Profit before Tax - it rose 50.56% in 2008 over 2007. It was only due to tax that the PAT was lower. The company does not have control over Taxation.
When you start before a low base, the profit growth in initial year always look higher. However, in the market place, most of the investors look for how much money that a company made (how many crores) rather than profit growth in % terms. That aspect is left to the dumb analysts who go by books
The fact of the matter is that the company increased its profit in last year by over 39%. You have to see the latest trend, not CAGR for 5 years - leave them to the analysts who might ask their customers not to buy this stock, so that you can buy it cheap.
Since the housing loan finance has gained momentum in last 2 years only, and LICHF having its root right into villages, it is a better company than HDFC. How many know of HDFC in small town of 10 lakh people? Even in a small town of only 100,000 people, they know LIC. LIC is a household name, HDFC comes distant second.
For growth stock like this, you can not apply PE multiple of just 7. Just 7? Are you out of your mind? Such stocks usually trade at 25 to 30 times in bull market. Otherwise, they should trade at least 18 times the prospective earnings. In next 2 years, the EPS may go to Rs 90 to Rs 99. That gives the prospective price of Rs 1800 and even if you discount it by 20%, it may come to Rs 1440.
Look at the dividend growth. it pays 22% of PAT as dividend. If the company makes about Rs 99 as projected by me, the dividend payout will be Rs 22 per share or 9.33% of current market price. It is higher than even bank deposits.
I had originally bought this stock at Rs 48 and at Rs 61. Of course, I have sold, but just think of it. Rs 22 dividend in 2010 will be equal to 45.86% on original investment.
Further, growing companies do not pay much dividend - look at Apple. Still people pay 33 times to 35 times PE. Look at Reliance, it pays negligible dividend in spite of being a mature company. What they give is bonus shares or paper that can be printed in any printing press. And the Indian investors go on worshipping them for the scrap paper that they distribute.
HPCL, BPCL, IOC, LICHF, MTNL, ITC are some of the most remarkable stocks in the Indian markets today. Those who do not buy them, they do not know investing - they are just speculators.
An investor is one who counts the value of his investment from every angle; a speculator is one who simply does not know what he is doing. If his neighbor says - do this, they do that. Their actions are dictated by others' sayings, whereas an Investor governs his action by the dictate of his intellect.
Kalidas, Hong Kong
20/7/2008 Ref: 09R-006
98)
for googol
I really do not want to get into endless discussion on this subject. Your base and calculations are completely weird, and in my 20 years of investment life, never came across such logic.
With regard to your comparison between RIL and BPCL, let us wait for next 3 years and see where it goes. RIL's prime days are over. RIL earned fame during Dhirubhai Ambani's days. At that time, there were no competitors around including high tech stocks. Today, you have hundreds of quality companies competing with RIL. The money therefore gets divided. You will not see the price of RIL at its peak (3600 or so) in next 10 years, but BPCL will go to over 2000 during same period.
Your approach is layman's approach - a speculator's approach, who try to justify the comparison based on wrong fundamentals. The industry in which RIL is in, never command the PE of over 10 0r 12 against RIL's 30 or 40 at one time. Same goes for LT. These are story stocks. They go on dividing and subdividing one company into 5 or 10 companies, and go on giving scrap papers like share certificates. they know very well that Indian investors do not look at the basic value of the company but bonus shares of distribution of shares. If they give you 5 shares from the division of same company, which never gave dividend to the extent the shares of new companies are given. It is like you have 4 bedroom apartment and go on selling or distributing to your children one each. In what way overall value has increased, except one becomes two, and two become there and so on.
Such stocks in international parlance, are called 'Con man's stocks'. Look at Anil Ambani's Reliance Power. Even when the ink has not dried over IPO, he started distributing bonus shares when the real power plants are almost 3 years away. And the stock goes up. He fools the investors, because he knows that Indian investors do not look up for value, but the scrap papers like extra share certificates.
I normally avoid discussing the subject after my original post unless there are meaningful enquiries. If you think that RIL is better stock than BPCL, then stay with it. Further, how do you know that after 2 years the interest rate in India will be 8% or 9%?
Let us end the discussion on this matter.
Kalidas, Hong Kong
20/7/2008
99)
Here is the glimpses of LIC Housing Finance. I do not know whether table is produced properly:
Profit & Loss account
Mar '06 Mar '07 Mar '08
.......
100)
for WhatsUP
I have not studied this stock, but it looks like that it is a small cap stocks (or mid cap). It is also illiquid. You are right, when so many large cap stocks at available at song, very liquid with over 50 years of histroy, I would not venture into this stock. When I know that I can double or treple the money in LICHF, HPCL, BPCL, MTNL, TVS Motors, Dish TV, Hotel Leela, Taj GVK Hotel, Petronet, GSPL, Air Deccan, Spice Jet etc . I would first profit from big counters, and when the market has sufficiently recovered, would venture into the stock recommended by you.
The oil is merely consolidating. Normally, when a stock or commodity doubles from previous large level of consolidation, then it would digest the gains for at least 2 to 3 months. Then it will move up or down depending on the strength.
in any case thanks for your sugestions.
Kalidas, Hong Kong
20/7/2008
101)
for pss5588
You may be right on some points. 'Market perception that counts'. This is what most investors are after. Their approach is market friendly. I am not of that type. I am value oriented. In market oriented stocks, people chase them all the time at all the prices. and finally, when the balloon bursts, they get hurt so badly that they can not recover from massive losses.
I give the example of one Hong Kong stock - called PCCW (old name was Hong Kong Telecom, one of the finest company in Asia in telecom sector. This was chased by Hong Kong billionaire' Mr. Li Ka Shing's son - Richard Lee to the extent that he ended up paying over $14 billions or so for taking over. The stock was moving up virtually everyday on presumption that the son is as good as father.
The stock went all the way from $ 8 to $ 27 in no time and then it crashed. Everything went other way round. Then the stock was reverse split 5 into 1 so that $ 28 price became $ 140 - today the price even after 8 years, is $ 5 only or the stock has lost almost 95% of total value.
For your information, Li Ka Shing is the Hong Kong's best known billionaire, he owns the Hutchison who strted Orange that is popular in India. When he was sitting on $ 25 billion profit, he did not take it, and finally his all investments crashed. This is why when they sold their stake in Hutchison Essar, they took the cash for the first time.
It is happening everywhere. This is the difference between the 'market perception' and 'value perception' But everyone has his own strategy.
In stock market, one has to be guided by what works best for them. You listen to everybody, but make your own decision dispassionately. If one can do that much, he has won his game - rightly or wrongly.
However, serious money is made only by money investing. I have made 300% to 800% in not only one stock but over 23 to 24 stocks in last 6 to 7 years, and that too without any margin finance or borrowing or leveraging. So I allow my instinct to guide me.
I am long enough in game having witnessed major crashes in 1987, 1991-2, 1999, 2001 and now - and the present scenario is the worst, although crash has not yet arrived. Current situation is like a person on a slow poison. I am already 60+ and therefore do not have heart to lose my life's savings. May be youngsters around the age of 26 to 36 can play the market the way you are suggesting - Market Perception.
Kalidas, Hong kong
20/7/2008
102)
for Mohan Saxena (Guest)
Almost all Investment Banks except perhaps Goldman Sachs are in deep red and they are still bleeding. Every month, about $400 Billions are still getting bad. If one sub prime loan fails, it takes with it nearly 6 derivative contracts.
No one knows from inside of a broking firm how deep they are in trouble. FED does not want to let any broker to fail,especially a large broker like Merrill and Lehman. All brokers are intertwined, they have cross contracts with other brokers, so if one fails, it takes with him other two. This is why you see the megers between two broking firms and banks - example - Bear Stearns and J P Morgan
To answer your question, I may say that if your information is true, then perhaps we are seeing last days of Lehman. This is critical month for them. If they can survive until August 21, 2008, they may get the life back again.
Unfortunately, US administration is not able to figure out from where to start. Every problem is merged with another, so they do not know where is the thread from where to begin, All actions so far taken by the administration, in my opinion are totally in wrong direction, so i am not hopeful for any recovery of the market.
Kalidas, hong Kong
20/7/2008
103)
Reply to Kalpesh & Rohit & so called Buffet 777,
It looks like you guys are interested in finding some fault in me by quoting me out of context. First of all, you neverread my all posts, pick up some in the middle and then go on complimenting yourself that you were right and those who followed me were the heavy losers.
KUD was also right that I am not day in day out trader. Now, lt me put the facts straight on your face, and if you can read simple English and some numbers from 1 to 9, then look at the following facts:
I initially gave SELL call in late December, and suggested to sell at least 70% of portfolio by 16/1/2008; The index plunged by 3000 points in 2 days on 22/1 and 23/1.
I again gave a SELL call to sell even remaining 30% and remain 100% cash by 31-Mar-2008 and the stocks slumped even further:
Now look at the following numbers of both Companies - Reliance Industries Ltd. and Larsen Toubro Ltd:
RELIANCE INDUSTRIES LTD
Date --------- Close --------Volume
31-Dec-07 ---- 2,887.50 ----1,281,300
15-Jan-08 ---- 3,156.00 ----3,798,600
22-Jan-08 ---- 2,360.70 ----8,766,200
31-Mar-08 ---- 2,252.70 ----3,096,500
16-Jul-08 ---- 1,957.25 ----3,876,600 Down 32.22% from first SELL call
LARSEN TOUBRO LTD.
31-Dec-07 ---- 4,165.00 --- 207,800
15-Jan-08 ---- 4,066.00 --- 689,900
22-Jan-08 ---- 3,590.00 ---1,545,600
31-Mar-08 ---- 3,004.00 --- 844,500
16-Jul-08 ---- 2,289.80 ---1,107,500 Down 45% from First SELL call.
So Mr. Kalpesh, Rohit and Buffet 777, look at the above facts. The people who SOLD at my instance, did not lose money - they are saving almost 32% to 45%. Please note that 'down' % is counted from higher base. If the stock drops by 50%, it has to double or up by 100% before even breaking even.
Further, the volume on 15/7/08 for RIL was 3,798,600 shares- that is the Investors who sold. The value comes to Rs 1200 crores. Since the investors who sold them have saved by 45%, means that they saved 1200 x 32% = Rs 384 crores.
Similarly, look at L&T. 689,000 shares were sold @ Rs 4066 or worth Rs 280 crores. They saved 45% or Rs 126 crores.
Between them I saved about Rs 510 crores, and that too for 1 day trading. Count the trading days from 31/12/07 to 16/1/2008 - I must have saved about Rs 7000 crores. Do you have vision to achieve what I achieved? Those who followed you must be vetting their pants. One day's rally due to political factor is not going to sustain.
This is my performance. So do not try to follow cheap methods to derogate me in the eyes of other boarders.
If you want to come up, try to be better than other standard. Do not try to lower the standard itself just to make you look bigger.
I really did not want to reply, once I decided to terminate the thread. But my lack of reply would have meant your strength. So I replied. I do not normally entertain the cheap posts like yours. I have better things to do.
Kalidas, Hong Kong
25/07/2008
104)
Reply to Deepak Jayawant Posted By Guest
This is definitely my last post in this thread. To answer your points, note the following:
He(Chindambaram) is opening up banking and insurance sector at wrong time. India is the only country in the world that has largest pool of savings. Almost all banks and insurance companies in the world are either bankrupt or having huge and unmanageable losses. The debt and capital market is dead, so they are trying to tap only last pool of savings - Insurance. if they are allowed here at this time, they will pass on all lousy and worthless papers like CDO/CDS by offering better than average return. The retail investors, who form the largest pool of savings in India, might get tempted by larger than size claim and lose precious savings of their life.
This is certainly not the right time to open up the sector in the midst of severe banking and insurance crisis. Almost all insurance companies are loaded with the worthless papers of junk bonds, CDO, CDS - look at AIG - world's largest Insurer.
There could be another angle too - the sector being opened is all new private banks of which ICICI bank is one of them. it is possible that Chidambaram is now aware of acute problem at ICICI, so instead of state helping them or nationalizing them later, he may want to pass on the 5 months old pregnant lady with lots of complications to a new husband.
This is why he is opening up the Private Banks and not PSU banks which is owned by GOI. Private troubles may be passed on to private equity firms or others in alien country. It may be a wily move.
Kalidas, Hong Kong
25/7/2008
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