Thursday, March 20, 2008

Morgan Stanley India-offshored Ostrich farm?

The eminent MS has managed to "actively manage" to underperform all yardsticks and are now giving even the law of averages a serious credibility problem..this despite landing in India well before the terms BRIC ,EMs ,Chindia,decoupled growth story etc. were even invented let alone fashionable.
In India specifically,they singularly became the reason "MutualFund" invoked much derisive laughter and finger pointing in the cocktail circuits..if you were the turkey with MF investments,you took care to not mention it(while silently watching laws of erosion at work).

Enter the aforementioned golden age of EmergingMarket equities and BRIC batting.. and suddenly even turkeys were making money..largely(of course) due to their complex and well thought out investment strategies(but strangely still not beating buy_and_hold).

Today,calls got louder for "expert" explanations and the (previously)cocksure "longTermOutlook" needed reinforcement,so out trotted Jayesh Gandhi,Morgan Stanley Investment Management vice-president and lead portfolio manager :

Given the crock they been dishing out to clients and investors since Sensex 21,500.. no surprise he looks a little ill at ease here.

The real question is if he believes his own mouth anymore when he spouts things are under control..just a little correction.

Sample this insight into his "long term" outlook:

In the short-term, it is difficult to predict market movements. However, if we see the history of equity markets in India during the last five years, corrections have been in the range of 10-20%, May 2006 and May 2004 are notable examples.
To a casual observer,this would raise some doubts about his "short" as well "long" term definitions if 5 years is all he can safely go back(to coincide with start of current bull mkt) to find some empirical support that all is well and within their "planned" investment strategy.

Which brings back to the rumour fast spreading in Mumbai,based on the historical evidence of superlative flightless birds this outfit has posted locally and the truck loads of sand deliveries that always accompany new appointments .. *maybe* Morgan Stanley India is just an Ostrich farm outsourced from NewYork.
What gives credence to the theory(in hindsight as usual) is the virtual impossibility of sand deliveries to go unnoticed in Manhattan and more importantly the legal implications if the litigating Spitzers ever found out the actual investment strategy.
The completely dysfunctional regulators and legal system make India possibly the only active enough market to give their managers a good headinsand grounding wherein they can mouth such blather(which will get distributed to comfort some luckless "investors" in their "schemes") while the local managers can pray hard at local temples for the law of averages to catch up before they get replaced by new birds.

Though,you got to give Jayesh credit.. he managed to emit this simple wisdom upside down,with his beak half full of sand:
In the current uncertain environment, with high volatility, it would be best to have a judicious mix of large and mid-cap stocks in the portfolio, with the objective of higher returns but with managed level of risk.
..*that* sounds simple enough.

Read the full article for more laughs. :)

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