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A Lion’s eye on the Bulls and Bears

“In India, companies may fall sick, but promoters rarely do!”

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January 2009

Back from Down South after rediscovering Chennai

Chennai was a completely unplanned break as 2008 rolled into 2009

Daughter was picked as Goalkeeper for the Maharashtra State Girls U-14 Football Team for the Nationals in Chennai…We followed her to Chennai…They came in second after having been told that they were the winners with 45 points,the night before closing ceremonies…but as is symtomatic of Indian Sport the host Team ,Tamil Nadu,lagging behind with 35 points were awarded controversial points for Coaching etc on the last day to enable them to clinch first place

Memento after Memento was presented to those Invited on the Dias and speech after speech followed to drag on the closing ceremony to over two hours….Some on the dias were associated with basketball and weightlifting and not football!…….For over 300 girls from 19 states who fought out for Honours over eight days and their coaches and managers there was not even a certificate presented on the day !….The Hosts got the Fairplay Trophy unfairly and were not cheered on by even a single team…there was no cup or trophy for the second and third teams….Local Chennai Editions of Leading Newspapers carried results but reserved  headlines and content only for Tamil Nadu Team Performance

Yet our Team was very cheerful and bonded brilliantly…so overhelmed is Western India Football Association with this Girls team performance and for coming second that they are felicitating the Team on January 7,2009 and in a seperate function,the President of the Association and our Aviation Minister,Mr Praful Patel too will be felicitating them

In fact sources tell us that All India Football Federation has selected four Maharashtra Girls in the First List of 40 probables for the India Team….believe that daughter is one of these four…she captained the team against Uttar Pradesh and Karnataka who we beat 3-1and 5-0 respectively…In an opening encounter she also earned a Valuable Green Card for brilliant goalkeeping that gave five points to Maharashtra

Hindustan University had played hosts to the Football Teams and matches too were held at their grounds on Campus…The University is 35 kms from Chennai on the Old Mahabalipuram Road and can be accessed through the IT Expressway as well as from the the Chennai Airport Side…Did both routes…IT Expressway has Toll Booths and surprisingly for an Expressway it has a lot of vehicular,pedestrian and even animal traffic…..Infosys Campus stands out from others of Satyam,Polaris,TCS and HCL …Oh ! and I noticed that the controversial Maytas Infrastructure Board on a large Tract of Undeveloped Land on the Expressway.Satyam has three seperate Buildings at three different locations on the Expressway  read more

Some Investing wisdom for 2009

Just a few Investing Pointers

  • Investing Impulsively is Injurious to Health
  • While focusing on Wealth Creation do not neglect Wealth Preservation…Don’t be in any Hurry yet to invest fresh Capital in Equity
  • Before you get carried away by advice from Indian and Overseas Investment Experts who you see again and again on Media Channels or read their reports…remember that 2008 was a Year when all of them contributed to a Collective Intelligence Failure and your continuing addiction to them may prove costly…now their contrasting advice is adding to your confusion…one predicts that Larsen & Toubro will crash further to Rs 552…another ups the target to Rs 1500 !  
  • Global Recession is not going to go away soon…neither is Credit Contraction, Terrorism and Global Warming and even therefore your Portfolio Blues  
  • USA and China are the two epicentres in all senses at either spectrum of the Globe…USA and it’s Dollar continues to be in the ICU and on oxygen,while China’s growth has decelerated significantly 
  • As the World debates Capitalism and it’s recurring ills,broking houses and advisors continue to predict Indices Targets and Ranges in 2009 based on micro and macro valuation inputs…be warned that Sentiments,more than Valuations will rule the roost in 2009
  • Oil Speculation assumed criminal undertones in 2008 with prices surging to US $ 150/barrel before ending the year sharply diving to US $ 40/barrel…Oil Companies,Oil Producing Nations and their Ministers formed cartels through Brokers and Banks,played the Oil Exchanges and scared the daylights of the Living World 
  • The Increasing and Unnerving Volatility,Collapse of Financial and Investment World Icons,Poor Visibility of Corporate Earnings and Global Violent Events that are acquainting us with our Mortality and the Unknown Depth of Global Recession are playing up the Fear and Risk of Investing in Equities
  • Consumer Staples are less sensitive and less elastic to recession….so Agri Commodities and Pharma may be good defensive bets at worst and aggressive plays at best
  • With Recession continuing to bare it’s fangs into 2010,capex spending,real estate and Infrastructure Investments will take a back seat on the twin effects of continuing credit contraction and ebbing demand….so be more than a bit wary of any strong recovery in these sectors in 2009
  • Companies that may hold their Share Price Lines will be those who are real asset backed,cash rich,low or no debts,minimum operating scale that comfortably covers Fixed Costs,clear brand visibility of products and service lines,market leaders,competitive in price and quality and nimble to adapt to customer needs and market conditions and those who practise good corporate governance 
  • Gold is a Good Asset to Hold for the Long Term..If uncomfortable to hold in Physical form,consider Gold ETFs of Strong Fund Houses…However holding Speculative Long Positions in Gold through Exchange Contracts on may not be rewarding in the Short Term 
  • Invest in Companies where the Book Value/Share and Cash/Share are much higher than the Share Price…However consdering that the Satyam Promoter wanted to do whisk away all of Satyam’s Cash to his Son’s Companies,keep an eye on How the Cash is managed in the Company…remember even Novartis moved Rs 640 crs in inter group lending at low interest rates in August 2008…Cash is King and Promoters may misuse Company cash…Chabrias did this to Shaw Wallace and Hindustan Dorr Oliver and the Lalbhais to Arvind Mills and Venkatesh to his Rayalseema Group and Damanias to their damania Companies…list is endless…huge cash surplus was diverted to promoter controlled companies as Investment in Equity never to be returned !   
  • Routed FII Inflows of over US $ 45 Billion from 2005 to 2007 contributed to the Market running away ahead of Fundamentals and managed to  cross 21000 on the Sensex in January 2008….FII reversed flows in 2008 and falling markets dropped their Portfolios to below US $ 100 Billion from levels of over US $ 300 billion…While FII Inflows should revive in 2009 the scale may be much lower…Better Sense will prevail and Sensex will not run away ahead of Fundamentals   
  • 2009 is the Year of General Elections in India and it’s going to be a continuation of the Coalition Era…so don’t expect the pace of Economic Reforms to again gather momentum as vested interests will ensure long debates and deferrals in State and Union Legislative Houses

Having reflected on all of the above,you can yet get some sound returns from Investment in Indian Equities in 2009 without having to resort to short selling…just ensure judicious stock selection and timely exits…easier said than done though !
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