Value emerges in "Front Runners"

What is wrong with the stock markets?

For months on end we heard about tons of money waiting on the sidelines for a dip to get in and partake the merry making based on India's strong fundamentals.. months later(and a few thousand points lower) we still hear about tons of money still waiting on the sidelines.

As anyone and his "wealth manager" can see, value has emerged in most stocks which love "front running" bull markets and seem poised to resume their run into la-la-land and lost glory..but still we spy diffidence on the part of most telly tube experts, financial advisors, stock market strategists and such ( OK partly because some of them are no longer in the employ or severely taken up by praying schedules and realigning their offices for ironing out some bearish Vaastu kinks.. ) , but as we all know it is only a matter of time and soon we will all be joking and laughing about this little correction that temporarily spooked our stock picking genius.

So, what ails the markets.. it is quite simple.. we all know the market experts(voices ), telly pundits, "research heads" of broking houses and other random "analysts" are always right and it pays to listen to these knowledgeables, rather than waste one's emotions on the tragedy the market and other "non smart" money constituents ( you don't want to be seen among these plebs) ..the heartburn these non believers are foisting on our mind.

To sum it .. the experts are right and the India story is intact .. the market is wrong and keeping faith is important.

How, you may ask, can we be so sure in the face of such dismal PMS performances.. well Luddic Research has outlined key observations and reasons in their latest research note to clients :

• Inflation Concerns: The govt is going all out to tackle this issue especially as it has dawned on them that their election prospects may be hurt more by high inflation figures than by low growth figures. (In fact P.Chidambaram has been warned against making any further public utterances about growth or lower interest rates altogether). The immediate steps being taken :

• Some key inputs for calculation of inflation were based on prices in 2007 due to lack of fresher govt figures and were obviously no good.. so in an effort to tame the havoc this little figure is playing in the "investor" and vote bank's mind set, the govt has decided to move away from this incorrect input and take 2006 prices as last reliable records to get inflation figure firmly under control.
• Immediately , a senior group of economists and other govt post holders have been despatched to Myanmar for first hand understanding of how that govt has been keeping inflation, prices, govt and generally the entire country under firm control ( not to mention pesky opposition parties). Multi pronged stability measures are expected to come out of this exercise.
• The various agencies and various govt deparments involved in calculating(or otherwise influencing) the final inflation figure and various inputs have been provided longer handled brooms to ensure all non cooperating prices of any item be firmly swept under the carpet as far out of sight as these handles will permit..and any deptt lacking carpets be immly provided same before next release of any official figures.
• In the event the above measures do not control inflation, it is expected the Defence ministry will be calling in all trade bodies and industry representatives to meet and discuss price controls a la Steel and Cement industry in the past to make its message clear.. also it is rumored minister Ramadoss will sit in as an enforcer (owing to his sterling performance at taming AIIMS).

• Growth story intactness: The second factor which attracts 'investors" (again,mostly male) to the market is the clearly visible and exciting path to riches that make them feel sharp and sexy in a lovely way.. but again the path has to be clearly spelt out and a raging bull market is such a path where most successes are attributed to one's brain while losses are simply "nobody could have predicted this..". Currently , the market is facing a prolonged hiatus in the heady march to the top( in fact some pundits were projecting India to trounce the entire planet in terms of economic promiscuity) and governmental hand holding is already evident to achieve the (clearly visible) glory ahead.. it is destiny that will not be denied.
  

• False rumors and irrational fears : The nosy media and the unscrupulous rumor mongers( some say foreign agents ) have been having a field day in blowing up non issues into unwarranted confidence busting agenda unto an increasingly edgy investor pack(already reeling with underwater PMS portfolios and "front runner" holdings ). The ability to see through these agendas and restore "investor" confidence is what separates Luddic Research from lesser shops :

• Falling RealEstate Prices : This rumor is so obviously a vested interest plant that it is amazing anyone even takes it seriously. Every one knows in India prices never come down.. as surely as there is no house of cards built around real estate speculation. ( Case in point the PE funds and other "smart" money from more developed and more clairvoyant countries are happily pumping cash into this fantastic opportunity )
  
• Economy slowing down : The cluelessness of this thought is quickly evident when you note that the currently jetBlack Kamath of ICICI (DRIP hall-of-famer) yesterday scotched any rumor of a slowdown by predicting scorching growth well into his greying years (despite some minor irritants like downgrades of their securitized retail loan portfolios which surprisingly are facing repayment issues).
• Fiscal gap / current account gap widening : we all love and trust the finance minister and as he said "trust me .. we have thought about all this carefully .." no reason to distrust him now and get worried about Rs.70,000 cr+($17B) farmer loan waiver.. Rs.95,000 cr($23B) fertiliser subsidy.. this govt we love and trust to do magic and keep the growth growing.

Like is evident from all the above .. it is only a matter of time before we resume out glorious bull run which will silence these doubters and weak hands.. in fact our friendly neighborhood PMS manager is especially bullish ( though, worryingly, untraceable for the last 2 weeks).

Indians for Hillary Clinton

For years India has ensured its best and the brightest headed to the land of opportunities as soon as the opportunity presented itself..you could be a bright engineer, bright MBA, bright scientist, bright scholar, bright bridegroom or just a bright Punjabi with the opportunity and before the plane had stopped rolling on the tarmac these brights would have established themselves as the pillars of the society and economy in the land of unlimited opportunity.

Only reasonable to expect of the quickly assimilating "browns" that before long they were getting politically savvy and displaying that famed brightness as discerning vote banks. This was further evidenced by "Bobby" Jindal from Punjab hinterland who quickly converted to Christianity (what's with the US ..can only church going, God fearing Christian who ascribe to George W.'s Intelligent Design magic ever get elected in this most developed of the developed ?) , disavowed his links with India, declared himself "Bobby" and got into seriously ingratiating himself with the powers that be. To be fair, he is a declared professional politician.
Lending credence to the assumption that only the brightest of the bright were allowed ashore off the boats was that turbanned marvel Sant Singh Chatwal who borrowed to the hilt from US banks before declaring bankruptcy and sidling up to the Clintons at every public event (where security was lax) till they began to acknowledge his striking headgear with increasing interest which inexorably transformed into back slapping friendship that continues to this day. In fact Chatwal is totally immersed in all kinds of fund raising and financing efforts of the Bill's various foundations to save the world and his services are proving indispensable for shaking down reluctant donors for Hillary's grand campaign( she's doing it for the country not herself) so they do not have to part with any of their own hard earned cash.

Why are we interested in this at all ? Well her false smiles and eyes popping in fake joy jar our senses thousands of miles away at an average 5 times a day and her utterances disturbingly bring up violent thoughts that one believed was only possible towards this sorry assed simian . .more on this Schmuckaroo later..I promise.

Coming back to Billy and Hillary, the unbelievable support she enjoys amongst American people and establishment ( as evidenced by her previously inevitable nomination) speaks volumes for why the USA is such a great nation and has taken a lead role in charting a course for this planet (and a few neighboring ones too,if possible) and most of the flora and fauna therein.
Ok, so most of her supporters are the illiterate, blue collar, rural and old biddies worried about a young black male running the country, but even so it does not explain the Indian community ( those few forward thinkers who have been able to refrain from trying to elect George W. the third time) supporting this two(rumor has it three) faced, sniper ducking, ready to lead from day one, gimmick on legs..especially when these are supposed to be best an brightest India produces..though I have to confess her blatant hypocrisy would have brought back fond memories(little twinges of guilt maybe?) of Indian politicians they left behind.

The only reason I can think of is that Indians are as racist (if not most) amongst all races when it comes to racism. This behavior has actually been finely practiced over the centuries and in the absence of consistent color characteristics to practice discrimination against, the previous generations struck upon caste system to be able to safely and surely discriminate and exploit.
This was safer than using skin color , which tended to vary from very fair to very dark through generations and within same castes / tribes inexplicably.Thus the skin color based discrimination was only practised against Blacks, as in African, whose color showed more consistency and could be safely used to feel superior and less worthless (brown holier than black) in these difficult times, what with casteism outlawed by infiltrated policymakers.
Fast forward to the US and despite all their academic, technological and financial success, the Indian community still struggled to be seen as anything but Brown or Indian or Asian despite much efforts to acquire mainstream first names, houses, cars, nannies, schools, professions etc.
Actually, the only acquisition which did significantly help, was getting a non Indian wife(only works for men not vice versa) to break through the brown ceiling.
Now that I focus on this, it becomes somewhat evident that the greatest factor by far is the Indian woman and her Indianness that hampers most of the progress towards blending into the American dream without the color coded baggage tags. It does sound callous but the closest any brown(we're talking only males here) has made it to the (white) American dream is by getting a non brown spouse.
This seems statistically significant to such a morbid degree that it rules out brown females being part of any (non Exotic) American dream in any forseeable future.
The contributing factors are stark( though too shallow to even think this way as they'd say):

• She cannot dress western(trying too hard) and cannot dress Indian (too exotic).
• She never does work out ( by mid thirties is carrying enough lard on hips to drive husbands wild)..severely restricting her clothing universe as well as vacation destinations (further away from beaches).
  
• Always trying to get a grip on her social insecurity, cultural insecurity, sexual insecurity, parental insecurity, religious insecurity and any new insecurity that the TV or Bollywood potboiler may throw up in the evening.
• A complex, emotional and intricate logic and reasoning (or lack) dog an Indian woman's mind even without transporting her millions of miles into a social, moral and psychological war zone where she feels physically (and colorfully) bested in most non brown settings, resulting in a lot more non linear behavioral idiosyncrasies that define her day.
• Most waking hours her mindset (mildly set) dwells on concepts like how much she cares, sacrifices, loves, gives up , provides, labors uncomplaining, adjusts as a woman and is still deeply unappreciated.. to arrive at(very convinced) the truth of how much more she deserves , earned the right to, have claim to, should be showered with, from all and sundry populating her life.

By the time the brown man gets to reasoning(to her) and rationalizing(to himself) how important this woman and family life is to him and how much he really,really appreciates her, he has lost the plot of where it all started out from.

So, where does that leave the Indian American when the elections come to his/her doorstep..one look at Barack Obama and his athletic(and black) looks decides it for the shape challenged (usually wife) as this is exactly the kind of change they can do without (in fact any change to their status quo looks like too much work ) ..also Hillary's shape is one they can readily identify with.

So the female(shape challenged predominant) brown vote goes to Hillary Clinton..and most line toeing husbands easily get beaten into toeing this line, especially given that George W cannot be voted in for a third term and is not a candidate.
But even without the wife issues dominating the brown vote bank, the racist underbelly of the subcontinent plays up significantly enough as blacks are the only ones brown parents still shudder to think may one day be their son-in -laws or daughter-in-laws ( not to mention the mama-in-laws)..so where does this vote go?

I know this is subject went way off topic, but it was coming when even the milkman in India recognises HC and our local markets are still coping with US fund "managers" orgies here last year ..so we gotta keep a lookout on what the blueCollars and illiterates in rural America, who seem to be suddenly having a hard time, might foist on us after their Texan chimpanzee.

Indian Real Estate is Realty Challenged.

Things became a little clearer this week. Parsvnath Developers' Pradeep Jain finally gave us a glimpse of the awesome intellect that has become the hallmark of the Indian realty sector and how they are in a fine position (hormonally) to see far beyond what ordinary mortals.

Increasingly these Quixotic Visionaries have had to battle the previously discussed bovine behavior and lack of faith from the very investors, lenders, buyers and general countrymen who will benefit the most from their vision and tireless efforts to "develop" this country.
In today's article , you can understand the sheer frustration that would have prompted such an appeal from the usually stoic Builders and Developers who have worked tirelessly and selflessly to give a roof over the heads of fellow Indians. Just when they were warming up to really and seriously house a serious number of families, their offices, their malls, they seem to be buffeted from all sides by vested interests and other such out to exploit them.

First, their stocks get hit by negativism.. 50-70% down and all the money spent on propping prices and buyBacking own shares is more or less vaporised.
Second, just when they were irreversibly invested and partly built on 1785 different projects spread throughout this country (A,B,C,D,E,F,G and some even O class cities ) the ponzi pyramid of bigger fool iterations hits a speed bump.
Third, their Bankers, who could usually be relied upon to volunteer as bag holders when everyone and his mother-in-law were finally getting wise and wanting out, were suddenly under orders to cut lending to this sector and would not budge no matter how much you "revalued" your "land Bank" to offer bigger collateral.
Fourth, the traditionally growth(and cloth) inclined finance minister ,who only last month was brow beating the banks to lower interest rates seemed to have been reined in by the opposition Parties (and own Party) to either attend to Inflation or dress in proper trousers and quickly dropped the lower interest plans..leaving the highly leveraged Realty sector facing new reality.
Fifth, the retail investors and locals(native Indians) who had been heavily relied on to act as the bigger fools in the past, were now showing their true colors as fair weather friends and refusing to up the ante (or even take the bag from some poor speculative "smart money" caught when the music stopped)..the point is if the local(who actually wants to live in the property) is refusing to take the bag at this price .. a lot of definitions need to be re-looked at.
Last and not least, it emerges today the cement and steel prices have risen to unplanned and unprecedented heights. This has just come as a total surprise(as the industry had projected flat or lower prices till year 2020) and looks very suspicious, to say the least.

Any other industry and the captains would be at a loss to figure out what happened, but these Construction Leaders quickly deConstructed the mysterious price escalation to cartels in the steel and cement sectors .
Why we are taken in by the sheer brilliance of this Industry's stalwarts is the raw intellect and vision that tether such insights. Not only did they identify a cartel in steel but also in cement and thus reached the same conclusion as our venerable Finance Minister independently.The FM who'd been sulking having failed to get banks to cut interest rates, jumped onto price controlling the nation into growth with gusto as the cement/steel sectors provided familiar whipping boys.

Further evidence of why our country's future development is safe in the able hands of the Jains , Agarwals and Goels("promoters" all) crowding the realty space rather than whimsical outsiders , can be seen in clueless observation of Cushman & Wakefield -

“With the exit of speculators from the residential market, the transaction volume is down by almost 40%."

Whereas, our trusted visionary Pradeep Jain's much more faith inspiring ( and frankly heroic) but well grounded opinion that I'm much more likely to buy -

Asked whether the industry was witnessing any slowdown due to high interest and inflation, he said: "There is no slowdown. I do not think there is any softening of prices." Softening of prices is next to impossible as input cost, interest rate and land prices have increased substantially, Jain added.

Also, further evidence of the amazing potential this sector offers is offered in the multiple PE and "smart money"and other smart manager driven funds which are unflaggingly buying up whatever they can in the Indian Real Estate space based on year 2025 earnings, at the time of writing .
In fact Parsvnath( getting a little obsessed here) , no slacker in such matters got hold of one such "smart" money bags Saffron Asset Advisors UK.. to dump some good stake on him.

Finally, we hear the astute National Real Estate Development Council (NAREDCO) identified a disturbing new Cartel of Buyers who are conniving to drive the Property prices lower and take unfair advantage of the Council's members..and took their findings to the (champion of the downtrodden) Finance Minister who immediately promised to look into the allegations and take strict action against all found guilty.

Indian Stock Broking , Broker..Broken?

The days pass slowly.
The south Mumbai air is now recording record density with the usual smog, grime, humidity now diffused with record levels of hope and longing. .the hope to recover some notional loss( we all know this is notional and temporary and markets will recover, so why the long face)..the longing to ride a bull move again..aahh, that was a feeling.

Every day the stock broking community awaits deliverance from this irrational and unexpected behaviour which has laid many a careful expansion plan to waste.
Just yesterday these Broking Houses(House sounds cool) were on recruitment sprees to fill every corner of India with necktie wearing executives to spread the gospel. The race was on to claim the biggest valuation as news broke about clueless trains from abroad disembarking new age fund managers with big money who wanted in on the financial space.
The message was clear.. maximize retail accounts, retail reach, retail teams, retail investors, retail traders..anything retail.. and these monkeys would pump in a few hundred million(USD) for, umm.. 5-7 % stake in a Broking House.

The glee was palpable (those days the downtown Mumbai air was thick with glee).

The local Broking houses pumped up the volume on recruiting anyone who owned a necktie and exhibited leadership qualities..as also those who owned a necktie and had a pulse.
There was a recruitment frenzy where assorted executives, tourist guides, bar tenders, waiters, fortune tellers, snake charmers etc. suddenly found themselves appointed Relationship Managers and other lofty Managers at leading Broking houses.
More offices, more managers, more accounts, more potential, more valuation and more More.

To be fair it wasn't the local brokers and broking firms fault, they suddenly caught the fancy of the global money managers and alpha seekers. These unassuming folks were just going about minding their business when this herd let loose the fun fest on them.

And then the bulls failed them..the bulls, they just failed.

Today's press.. the accountants can't cook these books any further. These fine equity cult spreaders look a little spread themselves. Make no mistake, it is bad when your accountants can't find growth and earnings as per your expectations..and start mentioning unmentionables like writeoffs and provisioning and recognizing losses..this almost sounds like we got the SEC here to replace the doddering, rupee challenged fools of SEBI !!

As some old timers noted, if this disturbing behavior is not dealt with promptly and firmly the Indian investor might soon even start asking for transparent accounting !!

Sample this from the above article..

"At least four top brokerages — Religare Enterprise, Edelweiss Capital, Emkay Shares and Stocks and Modern Securities — have delayed their fourth quarter results."

..these Popes of the equity religion who spread their gospel through evangelical TV and branch networks far into the countryside are increasingly spending less time on TV and more in their offices to prod the accountants to fix the mess and get on with the growth numbers. As any faithful can vouch..you never question the Gods..you keep the faith.

After all they have not been pontificating(so knowledgeably) on TV and other media about corporate growth, prospects, results, earnings,etc. so that the unwashed plebians could start questioning their companies' results or when they should announce the same. Altruistic Missionaries have never had it easy.

But the faithful hordes are now behaving like panicky hens instead of the predictable flock and though they(Broking Houses') quickly explained quite clearly that each had a totally different (and valid) reason to delay the results..and the fact that four of them happened to be in the same sector is a random occurrence to which no weight need be assigned..this obtuse market is increasingly hard to convince.

Actually, I think the overseas cognoscenti with the (previously identified) foresight and extrapolative tendencies may be the only believers who actually are still be patting themselves for their valuation due diligence and quick deal making that proves their mettle.

The natives for the most part lack vision..and that is destiny.

Bull Banking

Today, India is banking on bulls, there has never been a time when this country has needed bulls as badly as now..not in the green(agriculture) revolution not in the white(milk) revolution.

Let me elaborate..the Indian corporate sector is by and large heavily "invested"( primarily otherPeoplesMoney) in massive growth plans. Corporate India is united in its commitment to eradicate gravity in growth, projections and share price movements . These companies are heroically led by assorted "promoters" who have significant egos to promote and no regulators to fear.

The last few years were the shining years for all such ambitions..
Announce plans -> shares move up(ok, make 'em) -> can borrow more -> bigger plans -> higher share price -> more borrowing capacity -> still bigger plans -> still higher share prices .. it was intoxicating.( sigh, it seems like only yesterday *Parsvnath*(who?) announced investment plans for Rs.60,000 crores , about $15B..that was a day I was proud to be Indian, we were second to none in testosterone).

..and then these bulls failed us, failed the promoters, failed corporate India, failed the "investors" , in fact failed this Country.

What was the promised land ?
Every "promoter" and his younger brother had borrowed every bank into the brink( only foolish RBI limitations and priority sector requirements kept these banks from delivering all their deposits to the "promoters" newest, shiniest megaloStupid,growth oriented "promotion".)
For all these ensuing shining years their CAs have been hard at work churning out (nonExistent) profits quarter after quarter, much to the delight of the applauding media and "investors", purely on the basis of hiding all current expenses in their mega growth investments. After all why operate in a Third world country if you cannot hoodwink random SEBIs, RBIs , NSEs etc. into believing any crock that you can think up. Come on, these hard working "promoters" have to justify the risk premiums commanded by third world "emerging market" corporates and I feel they do a fine, largely unappreciated job of it.
The Banks of course, just could not lend enough to SEZs , Retail, Real Estate, Brokers and all such growth oriented jackpots and finally resorted to paying interest to encourage offtake.(This novel business growth strategy was predictably pioneered by ICICI Bank(of DRIP fame) who somehow even showed quarterly profits on such loans).
The investments were thus soaring, employment was soaring, wages were soaring, stocks were soaring, property was soaring, promoters were soaring ..the country was soaring.
There were bulls every where : stock markets, properties, retail, SEZs , cricket , International flights, hotel lobbies, cocktail parties, gent's toilets..you couldn't step out of your house without bumping into a bull..you couldn't slow your car without irritated honks from the bulls.

Where are we now?
The bulls spoiled the party. They grew feathers and just turned chicken.
Their snouts turned to beaks and the previous heroic bullheadedness petered into unseemly flighty behavior.
The bovine strength on which the entire future of the country was being built was emasculated in a few quick weeks.
To be fair, everyone pitched in to try and grow new balls for the bull.. the media ,the financial "experts" and "advisers", the finance minister ( he actually tried to get banks to cut rates a few weeks back), the prime minister ( managed to emit some muffled "strong economy" and very "good growth prospects" when SoniaJi prodded him), the few clueless hedgeFunds and PE wees who still bought into the "corrections" every week till their offshore masters finally corrected their "vision"..but to no avail.. the bull just wouldn't get up.

What about the "promoters" ?
They are suffering and unfairly so.Their back breaking, endless hours spent rigging share prices, passing board resolutions for share buy backs, unlocking values for new subsidiaries ( more IPOs), arranging Indian currency/foreign currency / any currency debt against their enhanced equities and fresh debt to finance the enhancing of equity, launching new, negative margin, maximum market share businesses every monday..all this effort looks seriously threatened by the obtuse bullheaded refusal of former bulls to play bull!!
These promoters and their ilk have sacrificed profits and accounting principles in favour of investing in growth well beyond their reach and financial means(er,by a very long shot) just so the country could live up to the expectations of the BRIC report by 2050 and are now being held hostage by a particularly slow thinking critter.
This is doubly unfair as 70-80% of their "projects" and revenues are in the investing stage and 100% of profits are (as usual) in the future..you just cannot pull away finance now..without the IPOs and the loans who will fund these "planned" investments of billions and billions.

What about the banks?
The banks are essentially employment shops for the chronically mediocre and the below average "people skilled" careerists who easily deceive themselves they understand "industry" and other economic activities.
Thus, being coaxed to believe that a country's economy is manifest in the banking sector, they took special pride in facilitating the growth and personal ambitions of the semi literate first gen(and papa financed second gen) "promoters", who thought they were playing the banker while the banker thought vice-versa. This was funny and convenient till our bulls caught the bird flu.
Bankers, by definition mediocre and thus unwitting big bag holders, suddenly find themselves having been handed jumbo bags in India..the chimpanzees they been shovelling funds to, instead of completing and revenue-ising (different from profit-ising which, of course, is blasphemous in corporate India) a project they originally funded..were seen to be spread thin over 23 new, different, more ambitious and more growth oriented projects which all go live in some convenient future(of course without cost or time overruns) and need massive more funding and the ownership structures as well as financial engineering involved changed every mealtime which nobody anymore understood, cared or even believed.

Today,the Promoters (and thus the country) is banking on the Banks and the banks are banking on the Bulls.

Perhaps, a solution?
The central government, in a moment of rare clarity, decided to attack the root cause rather than apply superficial BandAid to the symptoms..rather than try get the bulls on their feet with piecemeal efforts like rate cuts/ tax cuts etc. a novel and grassroot approach planned is to use the Polio Drops network to administer all adult males in the country with 1 oz of concentrated testosterone (fund managers get 4 oz ) to perk up the flagging libido dogging the financial markets in this country.

Predictably though, Reliance Life Sciences has been awarded the contract to supply the hormone as they have recently "discovered" vast quantities (also as usual, company officials refused to comment).

DLF+Reliance+ICICI+Pantaloon =DRIP

So much muck to rake, so little time.. so much comedy, so many clowns..

For too long BRIC has been foisted on us as the grand global scheme thru 2050 and still stands out as a bandwagon with all wheels intact(the trick is the far horizon..so cannot be seriously challenged till year 2040 and hopefully Roopa Purushothaman will have lived a happy, rich clairvoyant life in the meantime ).
But even so, quick to recognize the extreme short term outlook of firms like Goldman Sachs or any real usefulness of her 2050 projections she deftly monetized her fame to team up (the degree and star struck) Kishore Biyani who happily renamed his business "Future" group to reflect this move up from trousers. But recently he has put her to shorter time(and useful) frame projects like creches in his outlets to ensure she does not while away her time,on his dime, projecting year 2100 economic winners, a year he may not even witness. More on her later..we love future economists!

So all this global attention soon galvanized the worthy Indian "promoters" and business "leaders" into a libidinous growth pattern that soon separated the men from the boys.

Buying into this immense entrepreneurial energy was a no brainer and not be outdone by young birds flitting down from New York, our team soon cobbled together a gang of four stalwarts which the drawing dept. soon extrapolated into four largest and most respected companies by the year 2050 and coughed up our own homegrown acronym: DRIP . Below we list the pillars 2050:

D:DLF : The Goliath of Indian real estate , this phenom came from nowhere (actually the sleepy village of Gurgaon) to suddenly land in the centre of a frenzy that even surprised chairman K.P.Singh out of his afternoon siesta.He had no inkling his father-in-laws land banking fetish in olden times barren Delhi outskirts could catapult him into billGates' four-ball.The action caught him by such surprise he's had to disrupt his game of golf regularly to be lectured how he needs to hire "professionals" other than gardeners and caddies..frankly, he cannot understand the reason for such extravagance as he's doing just fine with periodically releasing a bits of land for "development" and planning pan India projects at the clubhouse with this new "IPO" money.
We know this group should be able to attract a few tens of billions of PE and leveraged professionally moronic money to throw into hare brained schemes.

R:Reliance : This group is actually the entire "I" in the BRIC quad. In India, if it moves, Reliance wants a piece..period. The brothers extraordinaire wake up each morning to leap into another new business before breakfast, glance at the financial dailies to see if their PR machine's yesterday's planted articles have the biggest fonts on page one and (god help them) if any negative articles didn't get smothered before daybreak.
With the regular new gas finds getting staid, Muckesh today launched into semiconductors and 21 other, unrelated, new projects( as happily reported by media) while A-nil fought hard to prop his otherPeoplesCapital empire thru buying own shares and random coal mine purchases costing 1000 cr ($250 m) for value 20,000 cr($5b) ..don't believe me ? Economic Times reported these figs...though, as usual "company officials refused to comment" but somehow "sources" are always available for every fabulous spiel emanating from the creative jugglenauts of corporate India. The undisputed go go boys.

I:ICICI Bank: Quite a few years back MV Kamath looked into the mirror at his freshly dyed(jet black) hair and realized he was surely most female bankers softest fantasy. Not one to ruminate important decisions he strode into the office that day and promoted everything female and walked on two legs , that he encountered , into senior and important positions at the Bank.
With all kinds of Govt. connections, subsidies, opacity, mediocrity and license to underperform, Kamath and his girls were onto a good jig and soon covered the whole country with *scale* banking.
As he and his flock have internalized over the years.. the manna is growth, because as long as you can grow, capitalize, securitize, layerize and obfuscatize .. nobody is the wiser esp. the "professional" money(FIIs,Hedgies,PEs) suits who love growth potentials and large branch networks.
Lately though he's having trouble finding good suckers for his securitized loans portfolios which even Chandas and Morparias have no clue how/where to collect from..add this to his trouble sweeping the subPrime cash cows under the carpet and he's promised to now highlight his hair to get schwing back in the banking miracle we know as ICICI..c'mon , he's just spotted a new flock of ladies that would put the fire back into Indian banking.We're bullish on this bull..chicks love him ;).


P: Pantaloon: Kishore Biyani was an ordinary shopkeeper minding his business selling trousers(not doing too well) till the retail revolution knocked down the building next to his parked scooter. Never one to not spot an opportunity knock(you don't need to knock many buildings next to his scooter) he was on his way to claim the retailKing title.
Very early on he realised there were no profits in this game, he'd spent enough time in this line to not waste time on trying to be profitable..the mantra was to roll the money..rotate the money..grow the business(not the money)..grow,grow,grow and the world grows with you..stop growing and they start asking funny questions like profitability, bottomline .
So at the time of going to press everything about this group is future,Future this, Future that , Future All( except of course real profits) .We are on because history has shown you never actually get to the future so this is covered.

Here's the common thread in DRIP companies, none of them, nada, zero, have any legs if you take away the growth, hype and the fine skills of capitalizations all expenses(to be amortized next 3 decades conveniently) and recognizing all (in fact a bit more..bit naughty) revenue this quarter.
Growth , more debt, bigger market cap, bigger ambition ..these are heady days.

We, of course , are just drippy about our DRIP strategy.

CitiGroup upgrades Lehman: Brown Chutzpah

You know you are behind the curve(no more a laughing matter) when you cannot figure out how these hot cats, who cannot figure out their own "book" by a longish shot(Bear Stearns "book" worth of $80/share gets sold at $2 overnight) .. and you wake up to find these fine "analysts" have put it all behind and are back in business as usual valuing others' "books" accurately on Apr 2:

"Citigroup was the best gainer in the Dow and today, Bear Stearns repeated an "out perform" rating."

Obviously there is strong spine in there, but also these guys are devoted to their craft.. reportedly the "out perform" was issued through a blackBerry from the sidewalk outside their newly pawned building.

Before you can recover ,CitiGroup returns the favor..too many of the believers have been "holding" Lehman stock(all the way down) on their "advise" and need relief :

"Lehman rose 5% in pre-open trade as it was upgraded to "buy" from "hold" at Citi, noting an "extremely attractive" entry point, the recent Fed and Treasury actions to boost liquidity and the broker's management."

(Noted:Another sign of our cluelessness: ..how do you now "buy" when you were "hold" all the way down.. there never was any "sell" ?)

..followed up for good measure:Citi reiterates buy rating on Lehman.

Now, Lehman's turn to upgrade..um, UBS ?

By now,details began to wash ashore in India..there were brown pundits involved in most all these utterances. The legions of desis(natives) who'd been toiling deep into nights and models (abstract only) had been having a rough time lately..very rough.
The law of averages were continually and horrifyingly failing every single call of "bottom in place" , "good value" , "cheap below book" and "oversold" call. Just when these cubicle wizards felt the outermost sigma possible this century was not going to be violated and "expertly" issued another "bottomed buy" call.. Gauss failed them again.

Lately, as one (nowbroken) model-analyst tearfully confessed, most of his ilk in the financial space had taken to issuing "buy" and "outperform" ratings randomly on Financials since markets refused to reflect logic and we all know illogic is yet to be modeled. So they were back to law of averages and the increased temple visits for divine signs of market bottoming.

Primary brownBrigade analysts like Prashant Bhatia who'd been building quite a career with 100% credit for 15% calls (that's admirable call hedging Prashant,you wicked fox, you).. and our beforementioned Pratik Gupta who usually was able to extrapolate stock indexes a couple of decades out ( in better times, he is rumored to have precisely projected a (to be est. in year 2015) Lhasa(Tibet) stock index "target" of 12,000 by year 2050)..these achievers in the ruthless global financial centers (where meritocracy rules) have been quietly (Ok not so quietly) edging out the reality challenged Blodgets and Meekers to bring that brown pride to their profession.

Coming back to the curve lagging realisation dawning at Luddic Research, there were additional uncomfortably model busting signs:

• UBS announces $19B in writedowns and shares rise.
  
• Lehman raises finance *it doesn't need* ..shares rise.
• SEC's "better" way to account illiquid assets.. Financials rise.
• A ton of bad news from all conceivable fronts.. markets really rise.

This put us back to the drawing board and here we display the legendary Luddic research analysis, which our clients trust and respect to explain and predict(retrospectively) most all market behavior( we confess this time the model transcended all expectations as the degree of correlation is *absolute* between our model and above market moves):

The model we now use to trade and predict(retro) any market with a >1.0% of brown(Indian subContinent origin) participants is based on (so obvious on hindsight) Brownian motion.

It all fell into place when our researchers dug up references in the ancient Vedas about such movements in Indian grain futures of the time which were dominated by exceedingly brown(outdoor mkts) men.This was way before similar behavior was noticed by Bob&Co in other non living molecules, pollen etc.

The defining characteristic of this "brown" legacy,which carries to present day markets, is these players' severely limited social life/social acceptability which frequently manifests in extreme desire to call bottoms and tops and pray for the best..safe in the knowledge they need to be right only once every few years to be employed and never need to risk own capital (in fact the law actually forbids this) .The sum total of these socially challenged(apart from work related junkets) analysts' varied and ad hoc utterances cause the markets to closely(*exactly*, if I may confide) replicate Brownian movement ,thus assuring the success of our model.

OTH,we are proud that our cubicle dwelling exports(singly insignificant,but as a group formidable) are able to exploit the capitalist folly of yonder lands with little loss to own dignity and capital.. a million brown "analysts" are not far from getting unleashed into this global financial la-la-land.. mark my words.

Luddic Research announces UnHedged Fund(tm).

Growing tired of snatching(after ample warning) candy from children,Turkeys, Ostrich, Sheep, Experts and other such clueless pretenders, who strangely, continue to proudly enroll and throng Flat Earth Society's doors (minus the candy), we today launched an UnHedged Fund(tm) to make some serious coin off this semi literate bunch of masochistic rabble.

Well, what really tipped the point today, was an inhouse research algorithm that threw out some interesting results :

• 96% of the market "investors"/traders were the bottom 10% of their academic classes (the few who actually attended any classes,that is).
• 99.2% of financial advisers,experts etc. had completely failed in making any money off their own advise and had only fixed salaries or commissions to keep them off the streets.
• 82% of these market advisers/experts had been publicly humiliated by their spouses after (yet again) losses due to eating own pudding.Thus, lately 100% of these never traded their own opinion.
• 98.9% of local brokers and brokerage houses were headed by academic and social laggards whose median education hovered around matriculation(grade 9 actually) and who had had suffered serious ridicule from the fairer sex during their impressionable years. Consequently a lot of their trading behavior was aimed at enhancing their (self image of) male attractiveness.
• 100% of foreign funded (FIIs,Hedge funds,PE,etc.) had ranks populated with young, testosterone fueled Yoyos, who loved to "network", "research" and "value-add" until they started touching(when no one was looking) random objects to see if same actually turned into gold. Strangely, "investors" usually did not notice the risk, even at this stage.
  
• 98.8% of all intelligent,professionally qualified Indians never consider opting for "Stock markets" as a career(largely due to unsavory,very misshapen, promoters with garish,crass tastes in interior decor). So they opt for yuppie careers selling soaps, being bankers, coding CRM trinkets, or just being "managers" good at "managing". If at all,the lowest percentile, ends up as research warm bodies in "professional" broking houses with excellent "target price" and "outperform" skills(these are the announce and pray group and have volatile careers).
• Lastly, it is now projected that Homo Sapiens(predominant stock market players) may not learn anything from History till about the year 2105.

Succumbing to the mind numbing opportunity as above, we decided to extrapolate our team with a strategic mix of out-of-the-box market beaters, as the team structure shows :

• Ludus: Commander-in-Chief for busting "stay-the-course" long term investors who fall into "weak beliefs, strongly held" majority(this market is big).
• Chief Economist: Lawrence Yun was by far the only good choice for precise(and brave) hand holding in these uncertain times.(Also he was having a rough time going out in public without young mothers asking him to make a prediction for their toddlers to laugh at.. though he attributes this to pure racism).Our decision purely rests on our planned expansion into real estate plays and his insights will be invaluable.
  
• Research Head: Mary Meeker has graciously accepted to be part of our deeply "fundamental" jargon spewing,extrapolation experts armed with 256 digit screen calculators. She caught our eye with very bullish projections on anything "Ambani". (In fact she projected Reliance gas *finds* to "surprise" us well into year 2050 as well as Reliance Biosciences cloning 6 identical Mukesh Ambanis with permanent jet black hair(no dye needed)..and endless growth for group.
  
• Trading Team: 3 Dart throwing circus monkeys ( have consistently shown beat-the -market performance in back tests).Plus they accepted to be paid in bananas (though payable daily).
  

We are confident this diversified core team will quickly create new inefficiencies in the market and enable us to quickly join the return free risks orgy in the markets.

Why UnHedged Fund you ask?.. well let me say we just love naked positions at Luddic Research !!

Succor for the Sheep.

It was bound to happen. Election year tom(pop) foolery..sloganeering "inclusive growth for everyone and their mothers-in-law)..hitherto un benefited fauna of the country were roused from their peaceful grazing to look at what the commotion was about and maybe grab a nibble.

What really brought this under closer bovine scrutiny was the unusually ferocious festivities that suddenly broke out in various rural belts around end february, a time devoid of harvest windfalls, election-time "leaders" visits or even rural employment schemes disbursements to the landlords' "hands". No, none of these..it was the (proudly) bedsheet wrapped, finance minister finally doing justice to his awesome talent for straddling the worlds of (traditional)refined politicking as well as macro Economic gymnastics without a wardrobe malfunction !
In one swift delivery,before the random Lallus, Yechurys, Raj Naths, Sidhus could recover.. he had wiped clean the debts of abt $15B owed by "farmers" and their various handlers..and quickly, before they scrambled to get someone educated to advise them what to say to the TV cameras ..the minister drove home his shock-and-awe advantage-
"Anyone oppose this? Who is opposing this concession to the farmers ? Stand up and be counted !! Stand up and be counted !! "..he was prancing, feinting, jabbing like Cassius Clay..it was his moment.
"Where's the money going to come from ? Is that your question ??..just rest assured "we" have deeply thought about it and that's it.It will be done and only I(publicly at least, privately=no one) know how it will be funded."
(Note: lately it has emerged,the minister did have long discussions with *helicopter* Ben Bernanke over at the greatest economic wonderLand regarding how our country would like to now embark on a higher growth/ consumption trajectory and could he recommend some good printers/ copters for inflating rural India).
In any case, aware they'd been had and no way to come out of this looking good..the rest of the peoples' representatives slowly slunk out of the house looking well and truly beaten.

But the rural belts sprang to life..Landlords everywhere had been fretting about the overdues on account of the SUVs, the A/Cs , the foreign education of kids, the new 6 bedroom farmhouses, the city houses their progeny had made them splurge on. Their wives couldn't get enough of cable TV and the accompanying lifestyle.The bank managers were pliant and impotent enough to not entertain thoughts of actually asking for a repayment but if the other *farmers* find out how much he was in the hock ..his Skoda *would* lose some of that sheen.
(Note: the bulk of the Agricultural loans in this country get disbursed through refined politico-socio-economic filters where the unconnected, apolitical, non-exploitative, unenterprising and (lord forbid) serf classes are largely culled before they can do much damage to the system.)

These non seasonal tremors were felt at the grass root levels where our unassuming sheep were grazing as unambitiously as they'd done for generations. For the sheep, this was the normal cycle of life- be fed every day, feel happy and content mostly, get ugly haircuts (shorn) regularly by the "marketmen", get over it, get fed again and live on. At the end of a typical cycle suddenly each one would be led out of the gate by the "marketmen" never to be seen again. But sheep being sheep, they never lost much sleep over the goners and concentrated on the next feed time and the temporary excitement it brought.

OK,OK..the sheep had been taken in by the stock market culture.They had gradually first,but rampantly later been piling their and their spouses feedstock into ever expanding future Infosys, future Reliance, future L&T,.. hell future anything. The friendly "relationship" managers from fine companies like Religare, Indiabulls, ICICIDirect, Kotak, Motilal Oswal, ShareKhan, 10Paisa, 5Paisa, OPaisa etc. had all stopped by their stockades( destiny ?) and "advised" them the sectoral growth opportunities and how sheep in next pen were getting fatter and fatter on their investment profits.
"Herd mentality" being practically copyrighted by the sheep,it was not long before the herd was feeding at the relationship managers new "stock market" troughs in a frenzy. It was good, it was heady and it was, in a way, sexually stimulating(for the males as usual). There were all kinds of sheep..young and old , dominant and sheepish ,woolly and shorn, fundamental and technical (newly educated in the terms) .
But as has happened for generations, the "marketmen" ultimately led them away to more grounded purposes. This time was different as so many were rounded up and trucked away bleating in one go..it was a little disturbing.

The stockades look quietened down now, what is left is skinny ,close shorn sheep, no meat and no wool to excite the marketmen..they nibble despondently and go about their routine limply.

But this was before the "inclusive growth" populism rained down on the farmer's SUV parked right next door to the disillusioned herd.Now ,some wise old sheep(who'd lost much power and say to younger libido in the stock frenzy) took the matter onto their own hooves and quietly planned how to be included in this talented minister's deficit free (no matter what) cloud seeding program.

As sheep ( by definition a herd to the last one) realistically cannot commit suicides singly or even force the goats to do same ( as happened in Landlords getting compensated for serfs' suicides) without immediately being suspected of being lemmings (apart from the whole herd perishing), it was decided the only solution was to invite the hon'ble Minister to the fence bordering their pasture and coax him to demonstrate his straddling talents for their benefit while they cheered wildly..and hoped for Govt bonds to fund their (ahem) losses.

Personally,I think it is feeble..

The Bigger Fool Nation.

Everybody, every single punter/investor/trader/speculator had figured out the winning formula/strategy to multibagger his portfolio .. some key themes "land bank", "unlocking" business values, "infrastructure" play, real estate , retail, logistics,buy every dip etc.etc.. each of the nouveau stock market cognoscenti was convinced he'd got this one figured out. The market was headed to the moon and his "strategic" investments were going to create wealth at a pace ..at a pace..really,even his greed was having trouble keeping pace with the pace.
Note: In India, this bull market business is purely a male bastion..well, maybe everywhere.(?)

Consequently, the countryside was teeming with alpha(generating) males who seemed to have transcended their respective locales, offices, jobs, small businesses, social standing etc. on the back of their new talent. Gravity had been soundly and roundly beaten in various portfolios, trading accounts and market cap of companies.
Slim, Buffett, Gates etc.were looking over their shoulders worriedly at this new threat from a motley bunch of land banking, value unlocking, scale-on-steroids visionaries from over yonder.

A quick couple of weeks later, the fool-proof formulae/strategies of just 2 weeks back were in deep question and the initial disbelief was fast turning into a cold reality check or "repricing" of risk premia(to give a good narration). Whatever stories had been intact/decoupled, values to be unlocked,land bank plays to be played..looked to be coupling up/ locking up in rapid fashion.

Across the country, newly crowned geniuses, experts, traders were getting flak..gravity was showing up in every account/portfolio with pent up fury. The experts were stripped bare,the (surprisingly inadequate) family jewels (all male domain,remember) were strung up for all to see.
As the sage of Omaha had warned:

"It is only when the tide goes out ..you can see who was swimming naked."

Well most ponds in the countryside had newly exposed gents, hopping around with hands cupped over their modest modesties, as the water levels fell sharply.

When you really put all these varied "investment" theories/strategies/formulas mentioned above together, you realize there was a small common denominator that accounted for the entire success.. the bigger fool theory. All these strategies worked as long as you found a bigger fool to believe in them and bid the price higher..and so up it all went..till at one stage the bigger fool just couldn't be located..Hell, even the Japanese got wise in the end(..and you know what that does to any boom cycle).

So,where does that leave us.. the markets are looking positively insipid..no chest thumping young males able to flush *investors* money into their asinine bandwagons..no do-it-yourself long term investor(3-6 months multibagger plans) available to join any worthwhile herd..and you know the market badly needs a fresh crop of bigger-fool-participants.

Fortunately,there is still one party where the PE types are still playing the bigger chimp music (same rules as the old game) ..Indian Real Estate sector.. so if you hurry along, you may just get to play some..though the fools are getting harder to rope in lately.

..but then we all know the property prices never go down in India.

India Infoline Shining !

In the foggy climate enveloping Indian markets, a crying need for level headed analysis and clear cut solutions was felt by one and all..big and small.

Everyday, "Investors" across the country from Ludhiana to Lucknow,Ajmer to Aurangabad, Nagpur to Nagercoil,Siliguri to Silvassa,Rajkot to Ranchi were turning on their televisions at day break to tune into the "expert" view of the day (after yesterday's further "irrational" decline)..

As usual,the experts trotted out and intoned(in various regional accents):

• "weakness" may be expected.(global cues are "weak").
• "caution" was advised.
• "fundamentals" remained strong.
  
• "long-term" was the view du jour.
• partial "profit booking" was advised (but,but..we are all underwater!!)
  
• "buying opportunity for long term investors" (though this was getting shaky to "advise").

So,our docile investors(except a few whose (old economy) fathers/ partners /spouses kicked the protesting future_multi_bagger_mavericks into booking losses NOW) heaved a sigh of relief and endured another day of declines..why,the experts were also saying "stay invested..do not panic"..that was good enough.
The relief of not taking definite loss today on the hope of recovery tomorrow was palpable.So onwards and downwards the days passed..

Then one "expert" decided enough was enough, he'd begun to dread turning up at office each day to face his and his merry employees' (spread over abt 600 offices across the country if the website be believed) band of investors who were increasingly losing sight of their multi-bagger gameplan and showing signs of deteriorating "sentiment".

The stalwart who saw a solution to end all this national misery,all this "correction" gone too far, was..R.Venkataraman Executive Director,co-promoter of India Infoline as the Economic times dutifully informed:

"It will take some time for the sentiment to change. There is a need for large institutions like LIC to start buying frontliners to provide a filip to sentiment."

"Also, there is a need to make policy changes by allowing pension funds in equity markets."

This just blew me away ! The genius in the solution was the simplicity.
It was incredible the whole investment community was suffering like this when the quick,short answer to this irrational decline was (gasp) just tell the government to buy!! All the govt needs to do is make all the PSU and maybe banks and maybe pension funds and maybe the Provident funds to show some support for the "frontliners".I suspect "frontliners" would include Reliance Pack,most Realty/Infrastructure stocks,Power stocks and maybe a few brokers could qualify too(the FII (suckers)partners were getting a little worried about their buy-in prices).

In fact,being election year,maybe some policy changes could be lobbied that in effect ensured that Indian stock markets can only go in one direction..up.Seriously,why wouldn't,why shouldn't institutions like LIC use their funds to participate in the amazing "growth story" we all believe in??..esp at this hour of need.

"We could still have been scaling new highs, getting higher valuations, opening more branches.."sighed R.Venkataraman. "Hell,my research team just extrapolated the corporate earnings for these "frontliners" into year 2015-16 and boss I'm telling you the P/E is microscopic!!".

I mean,you'd have thought Venky here was just another "expert" with a nicely shaped mustache and good "grasp" of stock market "investing",but just those 2 lines and the world knew he was head and shoulders above the average "expert" in fixing problems,esp stock market problems.
In fact rumor has it that US govt. has enquired if he could be loaned to them to fix a small "sentiment" problem there..though IndiaInfoline says "they do not comment on market rumours".

Last heard,the India Infoline advisory team,spearheaded by clearthinking R.Venkataraman (aided by the hard to beat mustache) has advised all retail clients in their far flung "branches" to immediately apply for agricultural loans to tide over this unplanned delay in the "filip" of sentiment.

This man is sheer genius..but then,their "Vision" statement says it all:

"Our vision is to be the most respected company in the financial services space."

..Venky has my respect and my space.

Monsoon Capital LLC- Toasted Turkey !

The flavor is tropical and the feathered are coming home to roost.(?)

Monsoon capital LLC's (prize Turkey) Gautam Prakash and his elite team forgot to get off the gravyTrain along with the leaping natives..as Marketwatch is reporting:

"The Monsoon India Inflection Fund LP has dropped 28.3% this month, through March 20. That leaves it down 45.9% so far in 2008, Prakash wrote in an update to investors. MarketWatch obtained a copy of the letter."

As in most turkeys before thanksgiving..Prakash displays the tragic signs of
*staytheCourse* disbelief and the inability to accept that the hand that fed and fattened him everyday is sharpening that knife NOT for trimming his toe nails(or claws,whatever).

What surprises him more is this is happening despite his ability to quickly grasp the situation at hand:

"The U.S. is mired in a housing collapse, a severe credit crunch and turmoil on Wall Street that threatens the survival of several financial institutions and has compelled the U.S. Federal Reserve to take actions that it has not taken since the Great Depression," Prakash explained in his letter to investors"

..and his innate gift for incisive analysis:

"These series of events and the size of losses have severely undermined investors, who have reassessed the risk premium associated with equities."
"Raising this investment risk premium to a higher level has triggered a correction in equity markets across the world; both developed as well as emerging markets," he added.

Based on his ability to see what others cannot,he offers:

Despite recent signs of slowing slightly, Indian economic growth will still be very strong in coming years and the country isn't as dependent on exports to the U.S. as other developing nations like China, Prakash said.

Then the mild rebuke to the far more myopic,plain "investors":

"Though India is not export-dependent... and therefore should be relatively less economically affected than its Asian neighbors, investors are not drawing this distinction at this point of the crisis," he noted.

..though it would have carried a lot more weight if the world and their barbers did not offer this same balm when the "correction" started in Jan(March 2008 is definitely less calming for loss swallowing fund clients,I feel).

Again we see the pitfalls of having to play with non sophisticates like the "retail investors" and speculators who,God forgive them,were actually buying stocks with borrowed money!!

Prakash said Monsoon has continued to see distressed selling by retail investors and speculators who had bought Indian stocks with borrowed money. Total sales by this group are now over $15 billion in the past two months, he noted.

I am beginning to sympathize with Gautam here,he just got broad-sided by the other players' stupidity.. but like they say:
"Never argue with idiots,they drag you down to their level and beat you with experience"

Gautam ,next time buddy(float me one more fund),just do not allow these leveraged,panicky types to buy any stocks at all.
We'll just keep the "growth story" intact and decoupled between us eh?

In fact his update to his "investors" would be quite hilarious if you were anyone but the target audience(ie. his turkeyFeed).

Finally one question Gautam(can't wrap my head around this)..Just where did you think the Sensex was headed,pal ?
.. As it is obvious you were still buying when the fools were jumping ship at 21,000.

p.s.If anyone can point me to a picture of turkey here..would like to put a face to the words.

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. :)

Reliance Energy BuyBack ?

A long time back,conventional wisdom said a company should buyback it's shares when it really has no better avenues to deploy the surplus cash it has generated i.e. the investment avenues are limited and so the company decides to return some of this surplus to its shareholders in the form of buyback.
But then time passes on and as the "equity culture" starts permeating third world countries,the fund managers turn up with their investment cash and look around for some companies large enough to absorb some of that cash.
Of course the Ambani Wunderbrothers seem perched atop a motley gang of(suddenly awakened) promoter run/family run businesses "houses" who find themselves in vogue with foreign funds and good at any business under the Indian sun.
In fact they suddenly started looking at themselves anew..hell, they'd been underestimating their abilities and entrepreneurial skills by a long shot.
And..they just fashion some new way of *doing* the markets..they just seem to get better and better at most all verticals and the world cheers on,"scale" and "creating wealth" get patented and hubris is now offshored to India.

Coming back to the REL buyback,the company has no real surpluses to speak of.If any can be cooked up, they are..which is par for most companies of this ilk (and I would be very disappointed if Junior here is not doing his part)..these surpluses are at best Enronized entries (capitalize every expense..duh?) and definitely cannot be used to buy back chewing gum much less shares.So I would say pure debt could be traced back as the source if anyone looked hard enough..but I digress.

The point is Ambani Jr. has planned investments piled right up to the attic covering any and every lucrative opportunity this country can throw up..but seems to be paying back the shareholders their equity(using idle surplus,of course) when he needs to tap equity and debt markets till he hits the age of 80 if all of his megalomania needs be satiated.

One begins to wonder if all this is,maybe just a little trick to prop up the share price of his suddenly sagging fortunes..esp as the Reliance Power "fundamentals" are looking shakier with each gimmick collapsing.. but then no, the investors are not that gullible..no,no too blatant even for the Reliance Pack.

Viva S&P!

Thursday(I think),the eminent Standard & Poor analysts(after poring over large amounts of data and their proprietary methodology) concluded that the subPrime crisis is more or less blown over,the writedowns more or less done, Financials looking like oversold..more or less..
Friday,Bear falls to $30 and Sunday is sold for $2( after the Fed gives it a $30B crutch)..well maybe *these* guys were a little aberration..most write downs are done.

The point as usual is these guys in S&P do this day in and day out,year round..i.e research and model and analyze some more(not to mention direct access to info not in public domain)..and yet come out with these well researched opinions which would find it tough to beat a dart throwing circus monkey's track record.

Finally, we need to just remember they still maintain AAA ratings on most bond Insurers and such.. maybe they are right about this.. they cannot be wrong all the time now..law of averages has to catch up with even these geniuses.

On the other hand,locally here in India,I think we will see a fresh set of market experts and Investment advisors(entertainers all) on CNBC once all this is finally over , as the current crop has just about lost most of their credibility( and more importantly their retail/HNI/whatever clients who will slowly limp back to their jobs or small businesses).
One is amazed how these "experts" are always in consensus and cocksure about "strong fundamentals" and "growth story" and "decoupled" when the markets are going up and completely baffled the next week and quite unsure about any "advise" when the market turns.

Smells like one way "Expertise".

Where are the "growth-story" cheer leaders?

For endless months the Indian stock markets were a feeding frenzy,where players gorged on and on with just the minimal quick breaks to answer calls of nature(more space!) and rush back to the banquet.
Others watching from outside joined the gorge fest..the food ran out..the kitchens cooked and served whatever fit into a pot and when even that ran out..more was ordered in with little regard to quality or hygiene.The collective appetite showed no signs of flagging..as early participants waned,fresh ones replaced with bigger gusto.It was heady..it was easy..you just needed to turn up.
The ushers were sent out far and wide,into the countryside,to round up the unwashed masses to partake this wonderful feast(of course bringing their cash along).

But recently(and unexpectedly),the "growthStoryIntact" and "decoupled" crowd have been slowly growing quieter and less visible.Their confidence is getting some muted and calls for caution a little louder.I suspect probably because of the huge losses these "experts" have caused their little bands of followers by urging to "average down" and "buy the dips" right down from Sensex 21,500 to 15,350.

I also suspect the disbelief of the herd is slowly turning and as is par for *every* boom-bust cycle the retail masses have held on till the very end.The point is the "experts" are able to take huge solace in the fact that *nobody* could have seen this coming and there is plenty of company.

It has been pretty hilarious watching the talking heads go from strongGrowthStory to growthStoryIntact to decoupledEconomy to maybeNotDecoupledMarkets to entirelyCoupled to shakyGrowthPossible.
But,like they say..

As a group, lemmings have a rotten image, but no individual lemming has ever received bad press.

The issue here is when will these clueless charlatans be held resposible..I know the country still battles basic, raw illiteracy, but there needs be someone calling out the game here.
Sample this gem from Deutsche Bank via bloomberg( hat tip galatime) ..

Deutsche lowered its March 2009 target for the Sensitive Index, or Sensex, to 18,000. The bank had earlier set a target for the index of 23,000 by Dec. 2008

..this dude Pratik Gupta,a "strategist" no less,must have some very complex models to arrive at 18k and not 17 or 19 ..just as he had earlier forecast 23,000 precisely and accurately.
The question arises what does he see others do not .. what qualifies him to see so far ahead and finally what purpose does this serve apart from filling the offices with warm bodies of his ilk looking busy for clients.