Tuesday, July 7, 2009

The Honey-Banana trade.. duh.

It has long been the desire and misguided aspiration of the toiling masses to get some inside dope on how the hedge fund cats trade and make their testosterone charged billions while the unwashed run around towns wearing ties, holding meetings, doing lunches, sucking up all and sundry .. but still falling far short of the hedgies' easy coin.

To address a universal desire of the clueless retail crowd .. "give me a tip..how to make money in stocks?" .. we part with a little gem we have been milking to sheer boredom..I swear if anyone says fade Madhu-Kela ( that's what Honey-Banana translates in Hindi to..) one more time I will strangle him.. but the fact remains that has been the sitting duck trade for most of the last year and a half.. and just about the easiest money to be made in the Indian markets.. fading the worst momentum chaser in post Independence India.

The fact that Madhu-Kela heads Reliance Mutual fund(purportedly the largest fund in India) also ensures you get plenty of liquidity to frolic in .. but you just need to hang a little longer as he starts believing his own vision and market impact as vindication .. and then it gets really fun.

The reason we divulge a trade secret is .. you know a strategy's time is nigh when your maid's (unemployed) husband conspiratorially confides madhu-kela trade that he heard from the building's maids' (unemployed) husbands' Punters Association's grapevine.. yup the Honey-Banana trade might be nearing the end of it's run.

Apart from stuffing up his fund's coffers with junk promoters' (great visionaries all..but that's about all) offerings or buying overpriced scrips religiously at market tops he regularly scouted across the countryside on weekends during the great Indian bull run .. he spent the last year disbelieving the correction ( proudly proclaiming last year Reliance Industry was his biggest holding .. then priced >2500 ) .. then finally getting out of his bullish clown suit at the bottom .. and to complete a comedy again proclaiming on CNBC after elections that he was physically getting bullish ..shouting bullish .. after the 40% run up !!..

What is there to say .. for all the wannabes out there who've always wanted to, but never been let in to play with the big boys .. you may as well partake this little rustic charm Indian opera.

We also read a limited life span to this strategy as it is only so far a man's small town charms, labored attempts at coherent speech and eager beaver company "visits" can cover up for lack of upper deck density.. and may not be long before their own clueless auditors get worried about certain peers in Satyam audit team having to shift into govt. provided habitat in Hyderabad for merely being "misled" by their client..

So enjoy the last few spades of the Honey.B contrarian cash.. too many drunks at this punch bowl now.


Max Dama said...


Good post by Deepak Shenoy you may be interested in commenting on: http://blog.investraction.com/2009/10/algo-trading-scaling-up-in-india.html

How's trading going?


Anonymous said...

It's Nov. 2009 where are you.? True, I haven't visited since Mar'09. it's time you came back. May my being here is a con. indicator?

thedude said...

Luddus, Can you update your comments on what you think of the Indian stock markets now. Just came across a story on bloomberg that the BSE is trading at its highest levels since Feb 08. Just a few thousand more and we will be staring at the Nov 07 highs. What are your opinions???

mutual fund investment said...

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Anonymous said...

Hey, where are you?

Run over by bullock cart? Hope not.