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April 14, 2009

Enjoying delivering Internal Training Workshops for one of India’s Largest Broking Group

Just returned from the Gujarat Leg of Workshops…Being fairly fluent in Gujarati,my mother tongue too, really helped as most of the interaction was in Gujarati……It’s been a gratifying and satisfying and enjoyable experience to have conceived and conducted Internal Training Workhops for one of India’s largest broking group…Completed Five and some more to go in North and South India

The Two day Workhop focuses on Grasping Fundamentals to add Value to Client Relationships and covers Time Value of Money,Valuation,US Economic Crisis,Indian Budget,Market Dynamics,Investment Gurus and their approach,Investor Mistakes,Logical Thinking,Integrity,Insider Trading,Hedging, and the Security Analysis and Portfolio Managment Process…It’s aimed at Relationship Managers,Associates and those that deal directly with Clients..either advising them,executing their deals or simply representing the firm with them

Several Concepts were examined…’Beta’ being an interesting one….How Aggressive players,Valuers and Hedgers use it despite it being debunked by several,including Warren Buffett  

It’s really been fun interacting with a wide spectrum of Men and Women,both young and old,who aggregated their emotions and experiences in the workshops to liven the proccedings

Yes,”P” from Mumbai,your ‘Praj’ has worked !…It’s up from Rs 57 to Rs 79….you did say your target was Rs 75 ! and that too within 15 days !….All I advice you is to assess and then take the Risk by distinguishing Momentum and Valuation

And yes “Mrs M ” from Vadodora,I’m glad you conveyed that the one significant takeaway for you from this workshop is that ‘Value’ and ‘Price’ are two seperate issues !

And “Mr B” from Rajkot,you’re brain is surely a whiz one when in comes to Number Crunching…you were computing even faster than I was !

And “Mr U” you said the Sensex will touch 21000 by 2010 !…Now you know,why this looks fundamentally improbable…it would need a favourable play of all three…significant earnings momentum,better PE rating and a quantum jump in Liquidity,especially FII Inflows….Quite Unlikely

Oh ! and thanks “Mr V” for suggesting I drop the “Cheers” Glass from my blog photo and even the Slides Photo….You will notice there is no Glass Now !…Happy !? Now,as you had feared, no one should feel that I’m doing all that I’m doing for a peg of whisky !       read more

Robert Shiller sounds a strong note of Caution for Stocks and Housing markets

In 2005,Robert Shiller came out with ‘Irrational Exuberance’….check out My Pages…I’ve recommended this Book.He’s now come out with another bestseller…‘Animal Spirits: How Human Psychology Drives the Economy,and Why it Matters for Global Capitalism’

Shiller cocreated the popular Case-Shiller House Price Index,which is used to measure performance in this Industry.He is currently the Professor of Economics at Yale University in USA   

In a recent March 2009 Video Interview at Yale,with Rik Kirland,Director of Publishing of McKinsey,Shiller cautioned on Stock & House Markets

Here’s what he said :

I think it’s really psychology that drives the stock market—and, increasingly, the market for homes as well.The problem is that it’s always a combination of psychology and reality

…..economic inequality has been getting worse and worse over the last couple of decades. And that is an alarming trend……

Time line for turnaround

I think there’s a tendency, when we’re watching the day-to-day fluctuations, to think that we’re going to find some news story that’s going to mark the turnaround and overreact to that. And I think that overreaction generates the high short-term volatility that we have now. More recently, we’ve been back up to Depression levels of volatility, and that reflects the heavy focusing of attention on the market now. So I don’t know what to say about finding a bottom, except that this is a process that’s going to evolve over years. And the confidence loss that we have is a serious problem.

I don’t want to say that I don’t think there will be a turnaround soon, but I think that many of us are too much expecting that it might come tomorrow or the day after. And this volatility is evidence of that. So I think it is quite possible that the stock market and the housing market, five years from now, will be close to where they are now.

This is not a forecast; but it wouldn’t surprise me in the least if we were right where we are now. And so maybe we shouldn’t be so trigger-happy and so worried about timing the market. I guess the basic investment advice that I would say is, maybe not so much focusing on that, but focusing on getting your risk profile right, getting the exposures so that you’re not overexposed to any one risk—you’re properly diversified, you’re hedged against specific risks that phase you

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