Old Times

Today is 26th Jan, our republic day. Am with my Nanaji in Ajmer and here to attend a wedding in a nearby town. Somehow remembering my childhood days when we used to be here in our summer vacations. Nearby stall's kachori, some sweets and a lassi was all we needed to have a good time.The same night, we had to go the terrace and see the entire city and wonder to our awe. And then, sleep there only (at the terrace) to welcome a new sunshine the next morning.

Am neither feeling nostalgic nor am I not happy today. But somehow at the bottom of my pit, I still feel, Life was much simpler those days. Remembering an SMS a friend recently sent to me and happy to share with a concluding remark on this short article-

"When getting high meant swinging on the playground, when protection meant wearing a helmet, when father's shoulders were the highest place on earth, when the worst enemies were your siblings, when race issues were about who ran the fastest, when the only drug you knew was a cough medicine, when the only thing that could hurt was losing a cricket match, when Goodbyes only meant until tomorrow..and we couldn't wait to grow up. Yeah, those were the days"

............Life has changed now.!

Life Goes On

As the year draws to a close, I look back to see where my Life's Balance sheet is standing. Being a Financial person, am naturally inclined to talk in such a language. But I am just not referring about the Financial Balancesheet but for my Life in general. Put another way, a statement of life, where it was an year ago and where is it now. While I analyse, for sure, I have a list of goals achieved and goals pending. Still, on a lighter note, I serenely ask myself, will this goal cycle ever end ? The answer comes on a firm note - 'Yes' but only when I get my dream car &... a dream house &... a dream girl &.. the dream xyz.. the list goes on ! Speaking with ancient wisdom, such things surely have never ended & won't for me either. As Life goes on, my goals would also. So in that sense, evolution is the basic essence of life, no need to feel eccentric about it !


Anyhow, 2011 was a big bang year with events happening across all spheres of life, be it the world of financial markets, rise and fall of great empires, tsunamis and other natural calamities, departure of renowned souls or even the most hit song of 2011, Kolaveri di. Born and brought up in a North Indian set up, I could never imagine myself rhyming on a South Indian (Tamil) song ever in my life, but guys, this song has got a tone to it..I happily agree.


I am writing this post just as an yearly closing & to mention one thing I take ahead from this year personally which is - "Come what may, good or ugly, right or wrong, or any such dualities of nature... Life still goes on". So, in summation, just chill and have fun ! 


The New Year's sun shines in a few days from now to bring us a world of New Goals, New Resolutions and New Possibilities. I heartily wish everybody a happy and a fulfilling year ahead.


Cheers !

Root Cause of 'The Global Mess'

Coming Soon

Indian Equities - Road ahead

As an addendum to my recent post  'Global Bear Market' dt Sep 01 2011, I thought to write another one on Indian Equities set up today and what they can do over the next one year.

India, which primarily has led the Global bear market (by peaking earliest in Nov '10) is facing big domestic worries on Inflation, corruption and Government administration. High fiscal deficit, Poor infrastructure and of course the new scams every day are taking a big toll on the Business and more specifically, the Investor Sentiment. Another more important worry is on the currency (INR) front wherein it is hovering around  50 mark (IUSD = INR 50), up already 10 % and if it crosses 53 (all time high), 58-60 is very much a probability. Such depreciation of currency doesn't help India as we are running a trade deficit, not a surplus. So, in all probability, fundamentally, India will be completely screwing its economics up if that scenario happens.


Anyhow, Lets dive straight in to what Indian stock market can do ahead.


We are in a Bear Market. No doubt about it. Also, I got a chance to analyse the price pattern of S&P 500 (US) and Nifty (India) over the last 10 years (am in the process of re-producing a chart here, apologies for delay). Very much evident is a similarity between the two indexes that we can witness. So, if we go purely by that, Nifty can fall as low as the 2008-09 lows (of 2000-2500) which is still 50 % away from current levels of around 5000 ! I know everybody would kill me for that but sadly and yes, you heard it right, this can be a part of the Bear Market Equation ! Now, am I really advocating that we are certainly going there ? Well, I certainly wish for a 'Big No' for very obvious reasons. Markets are a game of probabilities, lets assign some to their expected course of action over the next one year-

1. 60% Probability -  We continue the fall to reach a final target of 3800 to 4200 Nifty levels. 
2. 15% Probability - We continue the fall and retest 2008/09 lows of 2200-2500 nifty
3. 15% Probability - We continue the fall and stop somewhere around 3000-3500 Nifty
4. 5% Probability - We stay where we are and consolidate around 5000 levels
5. 5% Probability - We make a final low around 4600-4800 Nifty and go back to challenge 6300, even cross that, may be 7000 Nifty

Well, a wide range of scenarios but most (4/5) are confirming that this is a Bear Market and there is pain left on the screen both price as well time wise.

Globalization has made financial markets very much integrated and things are happening very quickly these days. So, making a forecast beyond an year now would not be very much justified. And hence, as things stand to this date, I expect this Bear Market to continue at-least till CY12 and we'll have to revisit the case of a new bull market then and there, if at all that is a possibility. 

Till then, not a good time for Long only Investors. For Long-Short, Bull or Bear really doesn't matter. Sadly, India story is over for some time to come now.

Global Bear Market

The Global Bear Market has finally arrived. I got late by a month in timing. 
Markets across the globe have tanked in last one month like a falling pack of cards. Just a brief snapshot of some important markets' performance in August 2011 -
Emerging Markets 
Brazil , down10%
Russia, down 20%
India, down10%
China - Never participated in the last bull market (already down)
Developed Markets
US, down 8%
Germany, down 20%
UK, down 10%
France, down 10%
HK, down 10%
Singapore, down 15%


Most markets have entered or are about to enter a bear market, even if we take the most conservative definition (down 20% from the peak). This was very much overdue, in my opinion.
(For more on this, refer my posts, viz.
'Market Crash - 2011 vs 2008' dt Feb 10 2011
'2011 - Markets peaking out' dt Feb 8 2011
'The great rally - is it sustainable ?' dt Jan 31 2010)..
I had discussed then a lot on the concerning issues in the Global Economic set up, Technicals of the market and of course the ongoing crash that is coming)

So, not just India, the globe is in a Bear Market and it is not a good time for Long only Investors. Sell on rally rather than Buy on dips is the mantra now. Now, what next for our markets, viz India ? I am writing a separate blog on this, shall post it soon.


Anyway, this time, I just hope Markets consolidate and build base base for some time period, atleast for 1-2 years, let the economic factors flush out the weed and cleanse the system of excessive debt and borrowing across the board, which has been the biggest menace of the last decade globally and has driven this Bear Market. 


Cheers anyway for Bears !

Top Short is Gold

In my recent article in Mar '11 on Silver as my Top Shorting recommendation across all commodities and asset classes at that time, I return to my call of Top Shorting once again, this time with one addition to the list, which is Gold.


Lets see some Historical Gold Price performance (all figures in approx. USD)


1 year     + 60% (USD 1200 to USD 1900)
2 year     +100% (USD 950 to USD 1900)
5 years   + 200% (USD 600 to USD 1900)
10 years + 800% (USD 200 to USD 1900)
30 years + 500% (USD 300 to USD 1900)


Well, it seems like Gold is the best short as well long term investment as it has given a positive return across all time frames ! But, the data doesn't tell you that Gold has not always gone unidirectional. There have been times, when the Gold prices have even corrected by more than 50 % in between the time periods !


So, as an addendum to my earlier post 'Gold Glitter - Is it a hype' ? dt Feb 28 '10 where in I had recommended that Gold (USD 900 then) is not in a bubble zone yet and there is much price appreciation left (wherein it has more than doubled to USD 1900 today as I write this), I feel now it is entering a bubble zone and an imminent crash of prices to the order of at-least 20-30% is not ruled out in the next 2-3 months. So, from USD 2000, I expect a drop of USD 400-600 on Gold price. (Note: Silver has already peaked and should also resume its Bear Market and breach its recent low of USD 35).


 But, why am I so bearish on Gold now ? I outline some reasons -

1. Sentiments have been extremely bullish on Gold this time around and I dont hear anyone talking of a less than USD 5000 Gold (it may reach there sometime but not before an imminent price crash as I mentioned above)
2. Reports of Hot money piling up in this commodity further adds to my bearishness on Gold. Hot Money pileup is never good news for Bulls of any Asset
3. Global economic slowdown is not expected to be as bad as it is made out to be and the hence the current price of Gold (considered to be a safe haven) much incorporates it
4. Parabolic rise in Gold Price in last three months (USD 1500 to 1900); such price behavior is generally a penultimate rally of an asset, just before an imminent price crash
5. An Outside Red day on Gold's Weekly Price charts (Considered to be very bearish)

So, to conclude, I am preferring to be a contrarian on Gold at this hour as compared to the overtly bullish sentiment prevailing, wherein at USD 1900-2000, I have a Top Short recommendation on it. I am not advocating the end of Long term bull market in Gold but just an intermediate term correction. We'll have to reevaluate the position at USD 1300-1400 as to where next it can head Till then, Enjoy Shorting it !


Risks to the Crash Call

1. Sovereign Debt Default from any major country
2. Purchase of Gold by any major Central Bank (US, Europe, China, India, etc)
3. Conversion to Gold Standard of Monetary system by some prominent nations (the price can really rise very rapidly if such an event happens)
4. Another round of Quantitative easing by major Global Central banks
5. Any random event

A Good Life

Recently, in one of my rare visits to a holy place, I noticed a guru being asked from his disciple 'what's the use of this life' ? He replied, "you have answered your query urself, my dear". The disciple couldn't understand as to how has he ? The guru asked him to repeat the question again, and he did ...'what's the use of this life..is Life ka matlab kya hai guruji ?'. The disciple still couldn't understand what Mr. Guru was referring to. Finally, the guru recited "use of life is to use it, constructive or destructive, that's your choice'. The disciple was stumbed though this time with satisfaction. I somehow was eavesdropping the conversation from a distance wondering "Man, this is my kind of language" and one of my earlier posts 'Purpose of life' talks on the same idea, though personally it took me a long time to figure this out ; Guru's recitation boosted my ego and imagined myself also a Guru preaching people in some great hill...  till my mom patted on my head "its time to go son, come". We left the place in sometime.


Anyhow, back home, I took this thread a little further and wondered now not about the meaning or use of life but what really can constitute a 'Good Life'. Yes of course, in simple terms, just being happy at all times translates to a Good life but I thought to pen down some second order derivatives of the happiness quotient. What constitutes to be happy ? Is it love, affection, care, recognition, money, beauty, freedom or all of them ? Some very simple thoughts I put hereby (in concrete bullet points for convenience). A Good Life is characterized by -

• Peak Health of Body & Soul as no Life can be good unless the basic gift of nature is taken care of and its vitality is maintained; as an addendum the experience of Beauty in any form also is an important constituent
• A strong foundation of Excellent Relationships, be it with Family, Friends or Relatives, in short your most close and loved ones
• Freedom and Independence to choose one's Life and Lifestyle
• Financial Stability (I wont go in detail here.. for obvious reasons)
• Infinite Humor & Laughter
• And the most important one - Living in the moment

Yes, the above constituents are no saintly words, rather fairly simple and straightforward; we all know and hear about them all the time but somehow we get so engaged in daily routine life that we forget to practice them

Yes, Material things are important though a reasonable possession is sufficient to qualify for a Good Life. We need not necessarily have the most flashy Sports Car, a Villa with a roof top pool (or a private helipad) or even a hot babe always by our side !! But ya, a reasonable amount certainly helps. As then, Sky's the limit for all such things.

At the risk of stating obvious, this is not an exhaustive list and am happy to believe that it quite a lot depends on Individual perception & choice on what constitutes a Good Life for them, but a fine blend of aforesaid would certainly constitute what anyone can certainly call a Good Life.

Life is all about Experiences & Moments and the more good and funny ones we can create, the better could be the journey. And as one of the old quote goes

"All unhappy people are unhappy in their own way, but happy ones are all alike".....the latter certainly live a Good Life.

Cheers.