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Archive for March, 2011

Markets and Nature

Hello Investors !!

Condolences to all the lives lost in Japan, the land of the rising sun is mauled by the worst earthquake in a century, followed by the tsunami to make things worst, triggering collapse of the nuclear plant, which would expose already battling lives to nuclear radiation. Nature in its revenge mood.

Now shift to the middle east and north africa, you have a jasmine revolution spreading its fragrance of democracy about peacefully in Tunisia and egypt, but now it stinks of blood in Libya , where the ruler is unrelenting enough to liberate his subjects and worse, status of its citizens is now automatically converted from residents to terrorists,

JAPAN disaster is nature’s curse and LIBYA’s disaster is its human curse.

And in these times we have a Cricket World Cup, which is immune to the shocks of JAPAN and LIBYA and people are cheering their teams as if nothing has happened,what an apathy !! the lack of it in full throttle.

These are the days of extreme diversification in nature,people and their attitudes.

So Markets in effect will also show these signs, and display these attitudes about fund flows,valuations and speculation (not investments) .

Normally taking a view in normal times in india is astrology combined with numerology and in such disastrous moments, it is foolishness even with a super moon.

As the headwinds have turned massive tsunami’s and civilizations are at the brink of meltdown.
Excessive exploitation of nature has created an imbalance and led to nature’s fury, and still we continue exploiting !!

Markets can become worst and spread pain to every investor at large, but an investor need not lose heart at this juncture, Human spirit is unrelenting and has stood the test of time and JAPAN is an example in many occasions, they can rise like a phoenix and a rising sun.

They would teach us the new meaning of HOPE,
We need to realign our investment approaches with nature and cull our speculation spirit which is directly proportional to greed and fear.

The analogy of greed and fear in markets are nothing but manifestations of human behavior which has led to innocent lives lost in JAPAN and LIBYA.

Markets would absorb all these emotions and you would see in ample display on monday.

As investors we need to consciously make efforts to conserve nature and invest in those instruments which would benefit the humanity in the long run.

Rather than looking at the P & L, look at the broader picture of sustainable businesses which provide goods and services which are not corrupt to nature or human beings.

This would be the sustainability mantra for humanity.

Wealth created over long periods of time can be wiped out in 30 secs by nature. We need to be a part of nature and align ourselves to nurture and protect as the case of investments into financial products.

We have certain indicative assets which we can correlate, Crude and Gold, Markets would track the movement in Crude very closely, Any downward correction in prices of crude can imply some semblance of peace in Libya and Upward movement in gold can imply of disasters happening and yet to come.

Pray for those in JAPAN and LIBYA, to recover the worst crisis of our times.

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Greetings from Wudstreet Investment Services !!!

Budget 2012 had a few positives and surely no major negatives.

Positive aspects of the budget was the low fiscal deficit forecast and the promise of more reforms in the budget session. The budget is pro- consumption and provides additional thrust for infrastructure development. Sectors positively impacted by the budget are Financials, Auto, Agri Inputs, Construction and Infrastructure, while sectors negatively impacted are Cement, Oil and Gas, Travel and Tourisim, Healthcare and Retail.

Post the initial euphoria on the budget, the market would have to negotiaite near term term headwinds like high inflation (rising crude price), rising interest rates, and likely earnings downgrades for FY12. With the more than 10% correction from recent highs, market valuations are now at reasonable levels compared to long-term averages. The relative underperformance of Indian markets in recent times vis a vis the developed markets and other emerging markets also makes our markets less prone to major FII outflows, other things remaining equal. Hence, despite near-term cautious view, we are have a positive outlook on the market from a medium to long-term perspective and would expect outperformnace in the 2H of CY11. The interim period will be provide a good opportunity for long-term investors to accumulate amidst market volailtity and generate decent returns over the next 2-3 years which we expect to be in line with corporate earnings growth @ 16-18%p.a.

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