One week we are celebrating political change. The next week is a very different one. The economic compulsion of politics simply takes over. The mood changes drastically. When food inflation is dogged and unrelenting, fighting it becomes a central banker’s job. But, in doing so, the RBI boss needs a lot of help from his political friends. Remember, India had the same person manning the ministry of agriculture for a whole decade. We aren’t talking of a rookie’s blundering. It reflects a much deeper malaise that needs to be corrected politically. Raiding hoarders, releasing food grains which the FCI is idling as excess stock, convincing producers to grow more and improving the agri-supply infrastructure are all measures that will beat the back of inflation. Production is the only long term answer to inflation. Strangely, only one Indian state has seen phenomenal growth in agricultural production. Gujarat.
“The individual investor should act consistently as an investor and not as a speculator.” – Ben Graham
Investors are happily keeping money in FD’s as they return close to 9%. While enjoying the benefits of a high interest rate regime prevailing now, investors are failing to understand how they could ensure they sustain these returns for a longer period of time. So, the debt investor is as much short term oriented as the equity investor. This is a bit intriguing though not surprising. Indian investors are essentially measuring investment over the short term. This obsessive short term mindset is preventing them from having a sensible return strategy even in their debt investing. Retail participants have a rare opportunity to devise a long term strategy for both their debt and equity investing now. This will help them to tide over inflation worries and also to gain from economic recovery over a five year period. The time is now.
Istrat: Fix your long term strategy in both debt and equity. Now.