Confidence is sometimes, all that matters. As uncertainty over the Indian economy and government policies grows, business confidence is falling. In fact, according to a survey in 2013, India’s business confidence is at 4 year low. The battered Indian economy grapples with record high current account deficit, weak rupee and slowest growth in decade. As shown in the diagram given above, confidence leads to spending, which eventually leads to expansion in the economy as reflected by rise in GDP, consequently strengthening its confidence. It is a circular, self-fulfilling prophesy. For example, if the price of an asset is widely expected to rise, it will result in its buying, ultimately pushing its prices higher. This shows how ‘confidence’ is self-fulfilling. In Oak Tree Capital’s Howard Marks words, the confidence, which underlies economic gains and price increases only, has an impact as long as it exists. Once it dies, its effect turns […]Read more
“The more that you read, the more things you will know. The more that you learn the more places you’ll go.” Dr. Seuss We have often come across a number of ‘Must Read’ books about investing. But, at the end of the day (& month), how many of us really manage to read through these gigantic reams of paper? A common complaint, we all have, is that they are too theoretical & indecipherable unless one has profound knowledge of economics, statistics, psychology & similar esoteric subjects. This book, “More Than You Know” by Michael J Mauboussin, decodes the indecipherable by tapping into a wide variety of knowledge from unconventional sources. Ever thought, what ants could teach us about the importance of diversity in efficient markets? What bees could reveal about the behaviour of crowds? This book will surprise you with such bizarre, yet immensely profitable insights that will change the […]Read more
Acknowledging what you don’t know is the dawning of wisdom- Charles T. Munger True indeed! I came to know much more about the super investor, Charles Thomas Munger, aka Charlie Munger, Vice-Chairman of Berkshire Hathaway over a discussion, which happened impromptu over a lunch meet with my fellow and senior analysts. In The Buffett Menu, we told you about the essential ingredients of the specials in Warren Buffett’s investment menu, basically his investment style. Now, it’s time to introduce you to the lollapalooza effect! As intriguing as it may sound, the concept behind ‘the lollapalooza effect’ holds much importance for the intelligent investor. A concept propounded by Charlie himself. Let me jog my memory, and reiterate the discussion for you. About Charles Thomas Munger… All of us knew about Charlie Munger being a very successful investor, even before joining Warren Buffett in Berkshire Hathaway as the Vice-Chairman. He ran an […]Read more
The quarter ending December 2012 looked up to the Government for some major reforms through its Union Budget for FY13-14, to address the macro problems affecting the economic growth of the country, such as slow investment growth, high inflation and rising current account deficit.
Capital intensive sectors took a hit on the back of sluggish construction activity and slowdown in order inflow, while companies in the defensive sectors outperformed.
In this backdrop, let’s look at how the Nifty 50 companies performed in Q3 of FY12-13? Has the market overvalued or undervalued Nifty vis-à-vis its MRP, and, what should investors do?
Let’s find out…Read more
Over the last 2-3 years, we have seen the economy riding a roller coaster, offering less foresight, and more structural distortions. In such a scenario, are factors like rising inflation & mis-selling by financial institutions shaking the retail investors’ confidence? Are they being driven to gold and real estate as preferred investment avenues rather than to sensible equity investing which could manifold their existing returns?
The budget provides the government with an important platform to introduce constructive reforms. So, could the FM, through the forthcoming Union Budget 2013, have anything in store to bring investor confidence back to the Indian Stock Market? Let’s find out…Read more