Monday, January 28, 2008

Who's winning? The Bulls or the Bears?

Today was another wild wild day in the Stock Market. After plunging little over 800 points in the morning it recovered to close just 208 points in the negative… some recovery…. In fact it has crossed over into 18000 territory to close at 18152. That’s the round up, now for the not so great news. There is a very, and I mean VERY, strong chance that Mr. Y.V. Reddy is not going to come out with anything more notable that a minor repo rate cut. That’s basically not going to do anything other than give out a signal that the RBI will in time reduce rates. If you have the time, check out this article
[http://www.myiris.com/newsCentre/newsPopup.php?fileR=20080128141617170&dir=2008/01/28&secID=livenews]
So we could see the markets, especially the banking, and auto sectors do a belly flop tomorrow when the promised rate cut does not come through.
If you really want to frighten yourself with regards to the American market and its recession check out this particular blog
[http://investmentpostcards.wordpress.com/]
It has some extremely disturbing data on the fate of American bond insurers.
The markets are beginning to resemble a cowboy rodeo. I wonder what will happen if the Bull is replaced with a Whale or an Elephant, something more stable that doesn’t buck so much. Perhaps that’ll stop these wild swings. After all expecting the Fed to sacrifice the erring banks and clean up the system is expecting a tad too much.
It’s really funny how people never learn. Every few years the same thing happens. The market goes up, people get optimistic, the market goes up some more, people get euphoric, the market goes up even more, small caps become darlings of the market turning into multi-baggers overnight. Then one fine day something gives and everything comes crashing down. The market loses trillions of rupees, investors (traders really) see vast amounts of their money wiped out, margin calls left right and centre, the finance minister comes on the tele waxing eloquent about the strong domestic growth and GDP at 9%. Then barely a month after asserting that nothing could stop the market, the very same people insist that the markets are done for and nothing can help them recover. The bear market has begun!!! Then of course the market starts to recover, people cheer up, the market goes higher, people get a little more optimistic and the cycle continues. What’s the difference between a bear market and a correction? A correction today lasts a few days; a bear market lasts a few months. In today’s fast paced world the time span for everything has reduced. Maybe someone should start looking at valuations for a change and stop discounting two years forward growth today. Two years is a long time, margins contract, competition comes in, top management leave, growth slows, government’s change, policies change… a lot can happen in two years.
It’s a pity there aren’t any full time bears left in the market. The bulls have stampeded long enough.

Tuesday, January 22, 2008

The Mad Mad World of Market Meltdowns

Don't know if I've mentioned this before, but I work in a stock brokerage firm that is a member of both the National and the Bombay Stock Exchange. Thus in addition to the regular monday morning blues, i also suffer the occasional "Black Monday"...Today was a double whammy, a monday and a very volatile "Black" monday... A perfectly rotten and evil day that saw markets collapse like a ballerina on an oil slick... The BSE had its largest intra day fall ever - in absolute points that is..... at one point in time we were a good 1700 odd points down... i really feel for those poor bulls stuck in long leveraged positions... your's is not a happy plight... the reasons for the crash... well they are many and varied. one gem was that the government was going to fall. another was that George Bush had proposed a growth plan that involved in some nebulous way, distributing $145 billion to the american tax payers. according to someone's calculation that worked out to $800 per tax payer.... either he doesn't know what things cost or he's mixed up the calculations of the american standard of living with that of somalia.... what the heck is a measley $800 going to do for someone with thousands in debt???? the difference as stephen roach succintly puts it, is this, during the tech boom and subsequent bust, tech contributed 12% to the US GDP. The housing industry on the contrary contributes a very hefty 72% to US GDP.... China's consumption is at $1 trillion v/s $9.5 trillion for the americans... Indian is almost no where at $650 bn... i agree with Mr. Roach when he says that no emerging market is going to be able to step into a breach caused by a slow down in US spending... but will $800 do it? i doubt it...
now the question on everyone's mind is .... when will this end? the bears (yours truly included) expected a correction... we even expected the market to come down to 18000 levels... well its done that.... so now what? do we rise like the phoenix or sink like the Titanic? i have a nasty feeling there's still a bit of sink left.... remember there need to be a few margin calls for today's trades... and the retail investors are still panicking.... the last time this happened was in 2006 when the commodity markets fell. today instead of the commodity markets its the us market, but the repercussions are very very similar. that time we sank close to 50% from 14000 odd to 8900.... so does that mean that this time round we will be seeing an index of 11000? i sincerely hope not....
my advice... stay in the large cap space... avoid all tips and so called multi-baggers like the plague, and buy on every fall.... that is in the last one hour of trading. chances are that we'll bounce back to 21000 by the time the budget is announced....

Saturday, January 19, 2008

Kinky Boots

I just finished watching this film called "Kinky Boots" on Star Movies.... all the women out there.... watch this film... the boots and the shoes are beyond awesome.... i just wish we could wear stuff like that here....
after watching "The Devil Wears Prada" i was all enthu for a few pairs of stilettos ... bought a whole bunch... they didn't last more than a month... bombay roads are awful... its not that i can't walk in them or anything... heck i look great in them... problem is, you step out of your nicely tiled office into a broken pavement strewed with construction debris, hawkers, litter, beggars and goodness knows what else..... my poor stilettos never had a chance....
perhaps its a good thing considering that fashion changes so quickly.... though i do think the makers might have made them a little more durable..... its strange how sneakers and most mens shoes are so usable and durable and in most cases manage to look good... women's wear on the other hand is, in my opinion, made by men who hate women.... i think we need a brand of women's footwear, made and designed by women for women.... i for one would pay big money for a pair of shoes that looked good, fit well and lasted at least 6 months.. is that asking too much? Is anyone listening....

Friday, January 18, 2008

The Rat Race

I'm part of the "Rat Race" that is regular rush hour Mumbai.... i leave my tiny little flat in the surburbs between 7:25 and 7:30 in the morning so i can get one of two trains that will reach Churchgate Station at 8:30, just in time for me to catch a cab and get to work.... i spend the first hour of my day in a mad rush to get the train and then once i get the dratted thing, i spend another half an hour standing keeping an eye peeled for a few inches of space freed by someone getting off....
Train travel in Mumbai defies all laws of physics.... despite a fixed amount of space normally solid humans follow the laws of liquids and manage to find space for what seems like millions.... if there is even a couple of inches standing space somewhere with a handhold within reach... no matter how treacherous or uncomfortable ... someone will be on it.... the trains of Mumbai serve as an eternal symbol of the indomitable spirit of the working class of Mumbai.... no matter what.... we will brave disease, (extremely) cramped spaces, determined beggars and fish water just to catch our train.... its not that we can't afford more expensive modes of transport.... we can.. we just do't want the bother of getting stuck in a traffic jam...
the trains and the people that frequently use them are a wonderfull combination.... nothing can keep them apart... floods, riots, bomb blasts.... the trains will continue .....
battered, dusty, dirty but yet dependable..... even a 15 minute delay is a big enough event to make the local news...
i once saw a paper stuck to a seat in a train.... someone had put chewing gum on the seat.... disgusting isn't it? so someone else had put a piece of paper over that so that no one's clothes would get messed up by it.... to me that signifies the spirit of Mumbai.... there is poverty, there is crime... there are molesters galore... but there are also those who will come out and help.... those who will queue up outside hospitals to donate blood to the victims of bomb blasts... those who will make tea and carry it out with biscuits to millions who are trudging home through waist deep water in the floods... they didn't have to..... they could have stayed in... they chose not to....
With this city its love or hate... nothing inbetween..... its intense.... definitely not for the faint of heart.