(Cartoonist: Aaaron Bacall: Cartoonstock.com) It is common knowledge that most of us make our buy and sell decisions based on sentiments, fads and on other psychological biases. This is true not only for us, but also in the case of money managers, and other professionals in the investing arena. In this post, when I refer to investors, it means the whole universe, you, me and the professionals. Why the bias? In today’s perennial connected world, our biases result […]
(Cartoonist: Chris Wildt: Cartoonstock.com) What the economy is doing today, tells us very little about what stocks might do tomorrow. Peter Lynch (who has been one of the most successful money managers ever) has said “If you spend 13 minutes a year trying to predict the economy, you have wasted 10 minutes”. In other words, betting on the stock market by analyzing economic indicators is a waste of time. Economic Indicators and Stock Market Returns I always thought that […]
(Cartoonist: Patrick Hardin: Cartoonstock.com) With oil down 40% and sentiment at bearish extremes, nobody wants to touch commodities. That is when opportunity emerges. Commodities, anyone? Did commodities capitulate on 28th November 2014? The OPEC meeting on the 27th of November was on expected lines. I thought the market reaction was strange. The market reacted as if it had been expecting a production cut. It is evident that the Saudis want the Americans to blink first, in so […]
(Cartoonist: Mike Flanagan: Cartoonstock.com) The term liquidity trap is commonly used in economics. I had forgotten about the concept completely, mainly due to my obsession with the markets. The abundance of liquidity in the markets, forced me go back to my economics text books to study what I recollected of the ‘liquidity trap’. What is a Liquidity trap? According to the Keynesian theory, a liquidity trap means that bond yields fall to such a low-level that they […]
(Cartoonist: Doug Pike: Cartoonstock.com) Risk is a four letter word which is commonly used in the markets. When investors decide to invest in equities as an asset class they are taking a higher risk. The risk premium is what they earn for taking that risk. Also within equities as an asset class, riskier stocks should deliver higher returns as compared to safe ones (in the longer term). This is common sense and the cornerstone of market-theory. If this were untrue, […]
(Cartoonist: James Whitworth: Cartoonstock.com) I had fleetingly mentioned microfinance as a demographic opportunity in one of the earlier posts. I felt it might be in order to elaborate. What is Microfinance? The origin and history of microfinance is actually from Bangladesh. In 1974 Muhammad Yunus, a Bangladeshi economics professor loaned $27 to 42 impoverished women. These women were making bamboo stools. It seems that these women were being paid a pittance. They had to depend on credit provided […]
(Source: Cartoonresource: Shutterstock) Demographics is one of the 3D’s in the hurricane of economic growth. The other two are, debt and deficits. How can India be considered to be a country which has a demographic dividend? I have tried to highlight the reasons. What is demographics? Demographics is the quantifiable study of a given population. The main themes used are gender, languages, age and ethnicity of the population. With India’s burgeoning population and its diversity on all […]
(Cartoonist : Dave Whamond : Cartoonstock.com) Investing and temperament go hand in hand with each other. All great investors are blessed with a great temperament. The dictionary meaning of the word temperament is ‘the combination of mental, physical and emotional traits of a person’. The legendary Warren Buffet has said that the most important quality for an investor is temperament and not intellect. He goes on to say that in investing, once you have ordinary intelligence, you need the […]
(Cartoonist : Chris Wildt : Cartoonstock.com) An insider trade can emanate from information, liquidity or manipulation. Hopefully, this post can provide some clues as to how to devise ones own strategy for imitating insider trades profitably. What is insider trading? The SEBI regulations on insider trading talks of ‘connected persons’ who have ‘access to unpublished price sensitive information’. It is impossible to understand what constitutes an insider trade without considering what the regulation say. However, I will not […]
(Cartoonist: Mike Baldwin: Cartoonstock.com) Nifty and Oil For the purposes of this post, I have assumed that U S $ 83 or thereabouts, is the ‘new normal’ for oil prices, and for the INR it is 62. The media reports are full of stories about how the fall in oil prices is a blessing in disguise for India. India’s politicians and central bankers are also happy about the downturn. Lower oil prices help shrink India’s current account deficit. They […]
