" C ash combined with courage in a time of crisis is priceless."  -  Warren Buffett With 2021 coming to end, now is the time to take stock of the year gone by and plan for the year ahead i.e. for 2022. On fundamentals Indian economy has crossed the pre-covid peaks. Bank’s NPA are reducing, capacity utilization, GST & direct tax collection, corporate earnings etc. are quite satisfactory. Just one word Covid or its Omicron variant changes the mood of the analysts.   Most of the pandemics emanated from poor or developing nations. But corona had turned the table. It started from China and spread through developed nations particularly US & Europe before engulfing the whole world.   Its new Omicron variant is repeating the same pattern. And number of active cases and deaths due to covid are on the rise again. India thus far is best placed in terms of new cases and covid mortality. But the way it is increasing among the developed nations definitely mandates extra

  Stock market’s behavior is highly volatile, just like a child. Their mood swings are quite similar. To the same chocolate the child may start jumping with joy and at times just throws it down in anger. But in the end, you make your child happy and the child hugs you, filling joy in your life. So are the equity markets.   Over last two years stock markets have swung to extremes on both the sides. While in March 2020 it offered one of the best opportunities to invest. And after that it didn’t let anyone ride the rally who missed boarding the bus at that time. It not only recovered its losses but galloped to much greater heights though not commensurate to its strengths i.e. earnings.   Slowly economy too followed the stock markets. And it has now almost crossed the pre-covid level. Additionally corporate took advantage of the covid situation and the covid packages offered by the governments, to reduce their costs and reported higher profits.   In our October communication we

Ships don’t sink because of the water around them but because of the water that gets inside them. Similar is inflation, it sinks your returns.   With interest rates on bank fixed deposits hovering around 5-5.5% for all major banks and inflation more than these interest rates, investors are in a fix as to where they should invest their money that will earn better returns and provide reasonable safety.   Alternate comes to private company fixed deposits and bonds. Even here interest rates on good quality bonds or corporate deposits are around 6.5-7% which is taxable. And even this return is hardly sufficient to beat the inflation. Equity investments though offer good returns over long term (minimum 5 years or more) but are riskier for short term.   In such scenario if the investment horizon is 3 to 5 years then balance advantage funds offers a good option to bank FDs. These schemes invests between 30% to 90% in equity markets depending on the parameters they set for determini

  "You only have to do a very few things right in your life so long as you don't do too many things wrong" - Warren Buffett India celebrated Vijay-Dashami – a festival that celebrates the victory of good over evil. When we talk about investing mistakes or evils, the two fundamental evils are – Greed and Fear that causes consequential investing mistakes & sometime blunders. Common question across time periods that we come across from our investor is, “Should I invest at this level”. And this question is irrespective of the market situation – whether stock markets are in bear phase – continuously falling for many sessions or are in bull phase-increasing rapidly or are range bound with no great swing on either side. This is because of our inherent human trait of either being too greedy or too afraid of the assumed situation. When we talk of long term, everybody agrees that in the long run economy will grow for sure and stock markets will also rise. And it is a gene

 

  "A market is the combined behavior of thousands of people responding to information, misinformation, and whim." - Kenneth Chang Economic activities are back to pre-covid era. Profits are rising, reflected in lowering P/E multiple. Tax collection, power consumption etc. are rising. And above all market is flush with liquidity, thanks to lower interest rates and money thrown into market by many central banks. So, markets have all the reasons to rise high but why should I be cautious. It’s not that only economic matters affect the markets. Socio-politico matters also have deep impact on markets in short to medium term. Because unstable politico-socio situation in the economy dissuades economic actors to work freely. At the moment following socio-politico and economical events ask us to be cautious on stock markets: Afghan Developments & China-Pak Nexus   Third Wave of Corona   Union Budget LIC’s IPO Corporate Results Central Bank’s Monetary Policy Let’s analyse them

“There are only two things you can invest – Time & Money. Of the two – Time is more important.” – Robert Kiyosaki  Beautiful story of an airbus & a fighter plane I came across today that immediately struck my mind, how similar is this to two traits of investing. Let me tell you the story first: Airbus & the Fighter Plane : An Airbus 380 was on it's way across to its destination. It was flying consistently at 800 km/hr at 30,000 feet, when suddenly a Eurofighter with Tempo Mach 2 appeared. The pilot of the fighter jet slowed down, flying alongside the Airbus and greeted the pilot of the passenger plane by radio: "Airbus, boring flight isn’t it? Now have a look here! He rolls his jet on its back, accelerates, breaks through the sound barrier, rises rapidly to a dizzying height and then swoops down almost to sea level in a breathtaking dive. He loops back next to the Airbus and asked, "Well, how was that?" The Airbus pilot answered: "Very impr

Few years back, we have talked about Indian’s ability to adapt to any situation. Same is reflected the way Indian government & corporates have managed the situation from first lock down to second phase of lock down. Despite the health bedlams during second wave of corona and unprecedented number of fatalities that forced the second lock down, Indian economy kept moving. Increase in tax collection, power consumption, capacity utilization, consumer spending, employment numbers etc. confirms the uptrend and revival in the economy. Stock markets anticipates the future and its trends reflect the same most of the time. With improved sentiments and well supported by ample liquidity it has seen an unprecedented rally over last year. And this rally has spread well across all market segments. Though market valuations are high at this point of time when compared to long term averages but with earnings fast catching up, these valuations are coming back to normal. For those who have to inve

  "You only have to do a very few things right in your life so long as you don't do too many things wrong" - Warren Buffett When markets are trading at all-time highs with most people waiting for correction to happen, investors are baffled by rush of new fund offers (NFOs) by the mutual fund companies. Even when they find some NFO worth considering, they are confused whether they should invest in them at such high levels of market or not. There are two questions – 1) whether one should invest in an NFO? And 2) Should one invest at the current markets levels? Let’s evaluate the situation and check if this is the right time to take a plunge into NFO or not. Whether one should invest in an NFO - Traditionally we have been of the view that when there are already established schemes available with the same objectives and had been doing well, we should avoid a new fund whose performance is yet to be seen. Over a period we have experienced, as the size of AUM grows of the exis

  "The market does not trade upon what everybody knows, but upon what those with the best information can foresee" – William Hamilton   For most of the investors there seems no breakthrough happening in the economy but markets are continuously scaling new highs. Second wave of corona caused havoc in people’s lives. We lost many precious lives, many times than the people we lost during its first wave. It forced lock down all across the country though degree varied. But stock markets this time, don’t seems to be worried at all for corona messes.   From economy side also, most of the news aren’t encouraging. All major agencies have downgraded forecasts of GDP growth for current financial year from their earlier estimates. But stock markets are still riding higher and higher.   Equity Market & Economy - Stock markets are deemed to be the barometer of an economy. But they do not necessarily present the true picture of the current state of economy. They either lead

 Need: One of our investor retired from a plum post from a private organisation with decent retirement corpus of over 1 crore but didn’t have a regular pension. He wanted to invest this corpus in a way that he gets a regular post-tax income of Rs.60,000/- per month. Another investor wanted to invest in lumpsum to provide regular money to his daughter to take care of her education and living expenses who was going to pursue a degree course in engineering in Europe.  Someone would like to provide a regular income to her special child to take care of expenses over lifetime of the child. Another person may wish to provide a regular income to her parents. Common among them all is that they have lumpsum money to invest to get regular cash flow from it with capital remaining safe or appreciating. Options: Retirees look towards senior citizen saving schemes (SCSS) and Pradhan Mantri Vaya Vandan Yojna (PMVYY) both offering 7.4% interest p.a. with an option to get interest monthly or quarterly