Quick edit: The battle against inflation waged by the Government translates into a battle with interest rates for the consumer. Home loans have ensured that inflation pinches every pocket and distorts disposable incomes severely. Those with more than one loan are really in a squeeze as their EMI’s are not…
Stock prices always discount future earnings. A company’s stock trades in multiples of its future earnings per share. This multiple which is referred to as the PE ratio is gradually coming down in the Indian stock markets. What we pay for future earnings is coming down. The PE multiple typically…
Quick edit: The ratings of Nations and banks are an indicator of their financial strength. In theory, these ratings indicate their soundness and stability. If the Rating agencies see deterioration in fundamentals, a downgrade should be effected. But downgrades of sovereigns seldom happen as swiftly as fundamentals change and often…
Quick edit: The valuations of most companies have cracked. In every bear market, the last phase is when the usually invincible ones start to show vulnerability. There are adequate signs of that happening. Investor sentiment tends to hit an all time low around the same time when the best companies…
Quick edit: Hope and fear seem to alternate on the global investor’s minds. Europe is plagued by a crisis for which the solutions may well be long, painful and drawn out. The investor expectation is largely centered around a bail out of some kind. Investors seem to build hope around…
The Indian stock markets are clearly racing towards a bottom. The negative symptoms are quite overwhelming. Index heavy weights keep regularly hitting new lows. Money shifts from cyclicals to defensives. Retail money moves out of stocks into debt instruments. Stock broking houses are practically empty and activity is at a…
Quick edit: Inflation is a wild thing. Stoking it is a nightmare for central bankers. The only tool in their hand is the interest rate. They have little option but to raise it periodically and see how prices behave. They also must keep praying that supply of goods and production…
Quick edit: We find it strange that everyone around us is using the short term Index trends to make long term investment decisions. At current valuations, people seem to be clearly missing the big picture. Clearly, near- term interest rates will hurt earnings. Indian companies have not built a strong…
Quick edit: When Investors choose safety over risk, they buy capital protection products, gold, insurance and other options they believe will achieve capital protection. Investors need to evaluate the premium paid for buying safety. Gold Prices trades near its all time highs and most capital protection products have costly exit…
Quick Edit: Forecasting market sentiment is far worse than forecasting the weather. Weather forecasting has advanced technology at work to help predict it. But, matters of the mind can’t be predicted by advanced technology. When people will overcome fear and make investment decisions is not easy to forecast. The markets…