Smart Investing..

This is a question lot of investors have in their mind after the fall we had seen in Indian markets. Sensex itself has fallen from 21000 level to now around 17500. In India, we will only see 22-24% earnings growth in FY08 and 15-16% in FY09. The first half of the year will be pretty volatile and the market might even see the lows of 14k on the sensex. Second half should be good and I expect the market to be rage bound and it might touch the highs of 21 K. What we should observe here is that 21 K is the earlier high and market might not move beyond that. All markets world wide had a great rally last 1-2yrs but if we go deep into details on each market we would understand the reality.For example, S& P had gone down by 20%, but it hadn’t gone up all that much,whereas the emerging markets are essentially way overboard and way over their long-term trend lines. So I think that in many cases, some of the emerging markets could still drop about 30-40% from the present levels. In precious m...

Need / Goal based financial planning: Investment into various investment products just for the appreciation/return given by the product or expected is not the right way to look at investing. Investors should always make a financial plan before they invest based on their needs and goals. They should understand their need, goal, risk appetite, time horizon and product details and then invest. This can only be achieved by proper financial planning. Asset allocation: Asset allocation is the key and investors should never ignore the basic principles of it. They should always be properly invested in various asset classes depending on their risk profile and time horizon. Proper Review and rebalance: Investors should keep a time table, ideally once in every quarter, to review the portfolio of various asset classes where they had invested. When the needs, risk profile and goal’s change due to various reasons then is the time we should go back to the portfolio made and do a proper review and ...

BRIC economies of Brazil, Russia, India & China will represent the major growth in world economy. China tops in actual returns for 2007 with the Shanghai Composite Index returning around 80% followed by Indonesian Composite Index with 52% and India’s Sensex with 45%. Concerns on valuations remain in China and some analyst expects Chinese markets to correct as the valuations seem to be very much stretched. On the other hand in India the valuations are justified by higher earnings growth and strong fundamentals. India also looks attractive to lot of analyst as the domestic demand is increasing and their reliance on US is decreasing. Indian economy is less susceptible to the happenings in the world economy & has increased the trade among other developing nations and with Europe. S&P believes the bull market in EM equities has further to run and the EM equities should represent a core, long-term holding in U.S. investor portfolios which will make sure that the local EM market...

Couple of days back I met one of the fund managers of a big asset management company and we had an in-depth talk on the basics of investing. The basic and the most important part of investing as per the discussion is the FV formulae. FV = PV (1+r) ^t Where FV is the future value PV is the Present value r is the rate & t is the time. This formulae is very powerful and it suggests that if we are investing, the FV i.e. the future value is not in our hands as we might not get what is promised, the rate of return is also not in our hands as it depends on the product which we buy. The time (t) and the PV ie the present value or the present amount which we have to invest is in our hands as we can decide how much and how long to invest. These are the only two variables which will decide the fate of our investments. Lot of people try to time the markets by observing the markets and trying to invest when markets are at the bottom and to sell when it is at the top. What people don’t understan...

This year we saw the first muhurat trading in the last seven years with a negative market breadth. Its more to do with the international market outlook due to the losses and write offs made by banks, financial institutions, broking and asset management companies there and the view that more such write offs are bound to happen. I had come up with an article on Sub prime in my blog in August 07 where I had a view that it’s just the beginning of the sub prime mess. (Check it out here.. I guess it’s just the beginning for the Sub prime crash & Market meltdown on US concerns ) The coming week we will find our markets in more red due to high oil prices, worries on rupee and dollar and the worry on more sub prime write off to happen in the US. U.S. stocks are poised for more weakness next week, after a complete wash out of the hopes that technology shares might pull the market out of the sub prime mess. Concern about credit problems is spreading throughout the economy take for example w...

Most of the investor community is worried about the market at this level. Some say we have grown very fast, some say FII’s might pull out, some say usually at this time of the year there comes a big correction and there are some who feels the political uncertainty might cause a big correction. But do we really have to worry about this market?? The fear in the market is not knowing where you are investing. If you know that you are investing in the world’s fastest growing economy with a GDP expectation of more than 9%, an economy which is a part of the emerging markets which is an asset class in itself and where the risk apetite of global investors is increasing. Emerging markets receive 10% of the global allocation and represents 30% of global economy and 15% of global profits. So a market like India looks attractive in the long term to lot of investors whatever the level is. There is also lot of concern regarding Hedge fund operators in India. Investors are of the opinion that they mig...

In February 2007 I had come up with an article Buy..Buy ..Buy... where I had asked lot of my clients to invest. Remember that was the time when markets were close to 12000 levels on Sensex. There was panic in the market as there was expectation that the market will go down to 8K levels soon. Most of my clients are still holding the asset class and have reaped the benefits. All my focus had been on long term investing and why we should not be worried about the market level especially when we are investing in an economy like India. Indian finance minister expects India will be growing around 10% on GDP with corporate returns to be in the range of 28% + with more appreciation in the rupee and more flow from Europe, USA & Asia. So doesn’t it makes sense to be in invested in India now? Ask any investment guru and he will say lets look long term. But what is long term??? Ideally its 3+ years. I was telling one of my customers today that some of the hedge fund operators in Europe have mad...