Grantham of GMO say the next Bust will be Nothing Like You Have Seen Before !

Jeremy Grantham of GMO say the next Bust will be Nothing Like You Have Seen Before ! ….but before that the Markets will make a New High of another 25% from current Levels

This he asserted in his latest Interview a few days ago in Fortune  ..A Few Weeks back in the New York Times he called the US Fed Chief Janet Yellen “Ignorant”

Some interesting quotes from his Fortune Interview :

  • “…go back to the 1980s and the U.S. had an aggregate debt level of about 1.3 times GDP. Then we had a massive spike over the next two decades to about 3.3 times debt. And GDP over that time period has been slowed. There isn’t any room in that data for the belief that more debt creates growth.”
  • “In the economic crisis after World War I, there was no attempt at intervention or bailouts, and the economy came roaring back. In the S&L crisis, we liquidated the bad banks and their bad real estate bets. Property prices fell, capitalist juices started to flow, and the economy came roaring back. This time around, we did not liquidate the guys who made the bad bets.”
  •  “Higher interest rates would have increased the wealth of savers. Instead, they became collateral damage of Bernanke’s policies. The theory is that lower interest rates are supposed to spur capital spending, right? Then why is capital spending so weak at this stage of the cycle. There is no evidence at all that quantitative easing has boosted capital spending. We have always come roaring back from recessions, even after the mismanaged Great Depression.”
  • “…...the Fed can manipulate stock prices. That’s perhaps the only thing they can do.…… the Fed encourages steady increasing leverage and more asset bubbles….. The Fed gives them(investing professionals) very cheap leverage on the upside, and then bails them out on the downside…..The only ones who have really benefited from QE are hedge fund managers.”
  • “We do think the market is going to go higher because the Fed hasn’t ended its game, and it won’t stop playing until we are in old-fashioned bubble territory and it bursts, which usually happens at two standard deviations from the market’s mean. That would take us to 2,350 on the S&P 500, or roughly 25% from where we are now.”
  • “….. to invest our clients’ money on the basis of speculation being driven by the Fed’s misguided policies doesn’t seem like the best thing to do with our clients’ money…….We invest our clients’ money based on our seven-year prediction. And over the next seven years, we think the market will have negative returns. The next bust will be unlike any other, because the Fed and other centrals banks around the world have taken on all this leverage that was out there and put it on their balance sheets. We have never had this before. Assets are overpriced generally. They will be cheap again. That’s how we will pay for this. It’s going to be very painful for investors.
  • read more

    Sensex Record Rise to tease 22000 & General Elections ~ A Corelation !?

    Sensex Record Rise & General Elections ~ A Corelation !?

    Is our Sensex now being Index Managed as soon as General Elections Dates were announced for April and May 2014 !?

    Are Market Gains Route again being adopted by a crony nexus to create funding for political parties !?

    You be the judge after reviewing a few pointers and charts that have been carried   in our SCRIP STANDPOINT Module as below

    Week Ending March 07, 2014 ~ Record Sensex :Corelated to General Elections!? ~ 07-Mar-2014

    Urge caution in trading and speculating in the short term though remain optimistic over the long term

    Consider hedging short term positions at least or taking trading and speculative profits off the table

    This is not to scare you and get you all cynical or justify it on Equities …but many Global Fund Managers are increasingly sounding the alarm because of Obama & Fed Policies

    There’s a Warning from Hedge Fund Manager Mark Spitznagel that Stocks will collapse 50% in 2014…he is supported too by Marc Faber who says we’re in a massive financial asset bubble that may burst anytime

     

    Three Hot Favourites of Three Private Leading Connected Investors & Share Brokers~all @ Rs 100 ~ Transport Corporation ~TV Today ~ Delta Corp

    Three Hot Favourites of Three Private Leading Investors and Share Brokers all connected to each other ~ all @ Rs 100  ~ Would you bet on any !?  

    Transport Corporation ~ @ Rs 100 ~ Radhakishan Damani  (RK) bets big on it 

    On December 31,2013 in a Bulk Deal on NSE,R K Damani Group’s Derive Investments picked @ 3.5% stake => 2548900 shares at Rs 78 to inspire the surge in the Price to reach a high of Rs 109.90 on BSE on 13/1/2014….It was at a 52 Week Low just four months earlier of just Rs 44 on 3/9/2013 

    The company has declared an Interim Dividend just last week

    We covered it on January 4,2014 on our SCRIP WATCH Module on www.jsalphaa.com as linked below 

    TCI @ Rs 96~Radhakishan Damani bets on it 

     TV Today ~ Rs 100 ~ A Favourite of Ramesh Damani

    This is promoted by the Living Media Group led by Aroon Purie.Living Media India holds 57.11% of the Equity while Aroon Purie holds 0.35%

    This is a favourite of another Damani ~Ramesh Damani (RD) ~ Radhakishan Damani (RK)’s company and he hold collectively a 2.89% equity stake ~ Reliance Capital holds a huge 12.58% stake 

    The Share Price had corrected from a recent 52 Week High of Rs 129 on the BSE on 8/1/2014…A 52 Week Low of Rs 53.40 was registered on 30/7/2013

    Q3 FY 14 Results are on February 11,2014

    We have just covered it today,February 5,2014 on our SCRIP WATCH Module on www.jsalphaa.com as linked below 

    TV Today Network @ Rs 100~Is the Correction from a High of Rs 129 inside a month now over?

    Delta Corp ~ Rs 100 ~ Rakesh Jhunjhunwala is riding on it too

    Led aggressively by Jaydev Mody,even leading Iconic Investor ,Rakesh & wife Rekha Jhunjhunwala hold 6.82% equity stake => 1.55 million shares…a few leading FIIs and Indian Institutions too are major stakeholders

    Jaydev Mody and Rakesh Jhunjhunwala jointly own Horses too ~ one of them ‘Jeremiah’ ran the Indian Derby last Sunday ! ~ Jaydev also had another horse ‘Falcon’ in the race ~ both did not win ~ they should have named their Horses Delta 1 & 2 ! 

    The Company is excited about their new Daman Hospitality Property that will open soon first as a Hotel and then offer Gambling Facilities too ~ they see it as a game changer with exponential growth in the years ahead

    The Share Price saw a 52 week high of Rs 107.70 on BSE on 7/1/2014 and a low of just Rs 38.95 on 22/3/2013   

    We covered it on December 24,2013 on our SCRIP WATCH Module on www.jsalphaa.com as linked below 

    Delta Corp at Rs 107 ~ New Casino, New Gamble and New High Price read more

    Compilation of Current & Diwali Picks 2013 by some Broking & FII Houses ~ Undertone remains Bullish

    Disclaimer at the Outset : This is merely a Compilation that is in Public Domain.Though I do like a few Ideas,please do not assume or take it as given that I am endorsing any of these.Investors need to make their own call after assessing the Scrip’s Value and Price Risks and should seek Professional help,if needed, in doing so rather than just lap up these Ideas as definite Winners in 2014 ~ No one likes even a Notional Loss ! 

    For those who are Interested these are the Current & Diwali Picks 2013 by some Broking & FII Houses

    Sectors like Banking,Steel,Pharma and Healthcare,Technology,Agro,Oil & Gas,and Infra seem to find favour

    Most of them have played safe ~ Some Ideas are fairly Core and Common like ICICI Bank,Reliance Industries and Axis Bank

    Tata Steel has recovered well from lower levels and come back into favour this year and remains a Buy with most of them

    Surprisingly I don’t spot Larsen & Toubro in any List ! 

    The Undertone clearly remains bullish,but only just….driven by the Liquidity of over US  $ 16 billion Net FII Inflows this year that has boosted Sentiment & Momentum and taken the Sensex and Nifty to record all time Highs of 21250+ and 6300+ respectively ~ What is interesting is that Macro Valuations are not really outlandish or even expensive ~ however these must be viewed in the overhang of the Indian & Global Macro issues that continue to unnerve and cause uncertainty  

    From these you can observe the Interesting High Potential Gain Ideas :

    1. Ashoka Buildcon from Emkay who are targeting an 84% rise in it
    2. Cadila from Angel Broking who are expecting a 35% rise in it
    3. United Phosphorous from Angel Broking who are targeting a 37% rise in it
    4. Adani Group Companies ! ~ Adani  Ports & Adani Power by Goldman Sachs who state that these mid infra companies  are at Low Valuations but the apparent reason is they are banking on Narendra Modi coming to power at the Centre too ~ in their own words they have ‘Modi-fied ‘ the Nifty upward
    Nifty and Sensex Levels too have been projected 8% to 10% higher from current Levels in a years time ~ Nomura has predicted a Sensex level of 22000 even quicker by March 2014

    Microsec 11 Diwali Picks

    Company

    CMP (29/10/13)

    Target Price (1 Yr)

    Upside Potential (%)

    Axis

    1251.20

    1458.00

    16.53 

    Cairn India

    315.90 

    415.00

    31.37

    Exide Ind

    124.00

    153.00

    23.39

    GMDC

    105.00

    133.00

    26.67

    ICICI Bank

    1075.45

    1204.00 

    11.95

    Pidilite Ind

    265.00

    330.00

    24.53

    Rallis India

    153.85

    185.00

    20.25

    Tata Steel

    326.00

    410.00

    25.77

    Tech Mahindra

    1523.30

    1793.00

    17.70

    Nifty

    6220.90

    6860.00

    10.27

    Nifty is trading at 12.70 times FY 15 Exp EPS of 490 and should move towards 14 times by next Diwali to give a target of 6860

     

    Emkay Global Financial Services 8 @ Diwali Picks

    Company

    CMP (30/10/13)

    Target Price (1 Yr)

    Upside Potential (%)

    LIC Housing Finance

    219

    260

    18.72

     Ashoka Buildcon Ltd

    45

    83

    84.44

     Nestle India

    5597

    5000

    (10.67)

     Lupin Ltd

    902

    996

    10.42

     Havells India Ltd

    751

    770

    2.53

     Bharti Airtel

    360

    400

    11.11

     Grasim Industries Ltd 

    2810

    3500

    24.56

    Mahindra Holidays & Resorts India Ltd 

    214

    250

    16.82

     

    ICICIDirect 5 Diwali Picks but no Targets given

    Company

    CMP (30/10/13)

    SBI

    1740

     Bajaj Auto

    2094

     Wipro

    486

     ENIL

    296

     Bajaj Electricals

    161

     

    Angel Broking 10 Diwali Picks

    Company

    CMP (23/10/13)

    Target Price (1 Yr)

    Upside Potential (%)

    Wipro

    492

    567

    15.24 

    ICICI Bank

    1025

    1181

    15.22 

    Hindustan Zinc

    135

    156

    15.56

    Axis Bank

    1210

    1392

    15.04

    Cipla

    423

    504

    19.15 

    Tata Steel

    335

    390

    16.42

    Cadila

    660

    894

    35.45

    United Phosphorous

    164

    225

    37.20

    Aurobindo Pharma

    216

    271

    25.46

    Crompton Greaves

    98

    115

    17.35

    Sensex

    20768

    22600

    8.8

     Expect the Sensex EPS to post a growth of 9.6 percent for FY2014 to 1307  and a healthier 15.4 percent for FY2015 to 1508. Attributing a 15x multiple to our Sensex EPS (in line with the 5-year average), we arrive at a target of 22,600 for the Sensex, implying an upside of 8.8 percent from the present levels.

    Goldman Sachs

    Today on November 5,2013 Goldman Sachs has ‘Modi-fied’ and just raised it’s Nifty Target to 6900 end 2014 ,up @ 9 % from current levels of 6300.

    Goldman says technology, healthcare, and energy are its top sectors.

    Goldman says it likes technology stocks including HCL Technologies and Tech Mahindra, oil and energy scrips such as Reliance Industries, Bharat Petroleum Corp Ltd and Coal India Ltd, banks including Yes Bank and IndusInd Bank and select auto and cement stocks.

    The US bank also included some mid-cap infrastructure stocks which are trading at inexpensive valuations such as Adani Power, NHPC Ltd, Materials stocks like Grasim Industries, and industrials stocks like Container Corp of India and Adani Ports and Special Economic Zone.

    Nomura

    Brokerage house Nomura has raised its Sensex target for the current financial year to 22,000 from 20,000 earlier

    Nomura’s top five strategy picks are now ICICI Bank , HCL Technologies , Reliance Industries , Tata Steel and NTPC . read more

    Reproduce my March 2012 View of Sensex Closing in December 2012 ~ predicted 18000+ Closing @18750 => we’re at 18500 levels just over a month away !

    Thought I shall reproduce my March 2012 View of Sensex Closing in December 2012 ~ predicted 18000+ Closing in December 2012 @ 18750 This was purely based ,as it should be normally,on Earnings Forecasts  and PE Multiples~ so far 2012 trend has remained true on this basis ~ there has been no real significant abnormal skewness on account of Global or Domestic Macro Economic or Geo Political Issues  Today,just over a month and a week away from Calender Year 2012 Close , on November 22,2012 our Sensex closed at 18517 ~ bang on target so far ! Sensex is up 19%+ so far in 2012 and 15%+ if adjusted for the  4% Rupee Drop vs the US $ From Rs 53 to Rs 55 so far in 2012 ~ India certainly has been a good place to be for Global Investors in 2012 ~ As of now I don’t see why 2013 should be any different ~ It’s been Positive on the Indices and even more Positive on Specific Astute Stock Selection Blogged as a Page on March 7,2012  Reproduced below Sensex  Close ~ December 2011 – 15455 …..December 2012  – ? Macro Indicated at 18000 + ~ Que Sera Sera…..

    Sensex Close December 2011 ~ 15455

     Sensex by December 2012 ?…Macro Indcated at 18000+

     Sensex as on March 7,2012 is 17146

    Intra Day High in 2012 on Feb 22,2012 ~ 18524

     Sensex Levels = Projected Sensex EPS FY 13 * P E Multiple

     EPS  FY 2013 projected from Assumed Flattish Sensex EPS of

    1100 in FY 2012 with @ 13 % Likely Earnings Growth in FY 13

    Likely

    Optimistic

    Aggressive

    Projected EPS FY 2013 =>

    1250

    1300

    1350

    P E Multiple

    <——————

    Sensex Levels

    —————>

    10

    12500

    13000

    13500

    15

    18750

    19500

    20250

    20

    25000

    26000

    27000

    25

    31250

    32500

    33750

     In 2012 the Macro Valuation indicates that the Sensex is going to be range bound in the 13 to 16 Multiple Level of the Likely Sensex EPS of 1250 for FY 13 …that gives a range of 16250 to 20000…It should close upward of 18000 in December 2012

     Keep an Eye on Quarterly Sensex EPS Trends in 2012 as well as Global and Domestic Macro Cues, especially Crude Oil Prices  

    Brokers connected on an Influential Indian Market Network are scared of a Market Crash and are advocating to exit Equities and move to Gold !

    Brokers connected on an Influential Indian Market Network are scared of a Market Crash and are advocating to exit Equities and move to Gold !

    “Sir ! I’m really scared!” said one who walked in to see me today ~ he was not so till recently !

    What can I say !

    Let me apply to Stocks and repeat the classic assertion in the movie “Oh My God!”

    ” Be God Loving Not God Fearing !” ~ Replace ‘God’ with ‘Stocks’ in this assertion

    Macro Winds may blow volatile  ~ Specific Stock Selection remains the Mantra

    Cheers !