Money Talk

Forecast is difficult with whichever model one uses. Today is the day that most people know was coming in anticipation of what the US Fed would do on interest rates which has been sitting on 0 for over an unusual 6 long years. Second question will be which direction would the stock market go today and in the short term (<6 months="" p=""> My bet is (and mind you is not a forecast): Interest Rates or borrowing rates would go up by 0.25%. Dow Jones will go south by 200-300 points. Nasdaq may fare better but would head south as well. Near term Dow Jones will fluctuate in the 16300-17000.

A common rephrase is "Invest in stocks with some basic knowledge and you are bound to make some money". I have to confess I took that to heart and what I had left was burnt fingers and more. Very few people can time the market and its not by merit but by pure coincidence they are rewarded. Losses can be a hard pill and once tried you will never want to risk your hard earned dollars. So what's there for stock market novices? 1.  Do your own mock portfolio of 100 stocks that you are impressed with (for returns, management prowess, insider ownership, P/E, Beta values, or disruptiveness of business). You can set it up using Yahoo! finance or Marketwatch etc. 2.  Follow these for at least 12-24 months. 3. Choose 10 stocks that belong to different sectors (technology, commodities, infrastructure, consumer durables, retail, etc.) that you find moving in the right direction. In my view that which grows at least 25% or above on an annualized basis. 4. Your strike rate w

There are many theories about the direction of the stock market for the rest of the year. General economy is not looking up, however. Housing is bottoming, or so the experts think. There are still huge inventories, something like a 11-month supply of new homes. Existing home values are trending higher compared to 6 months ago. Consumer confidence may be building, but primarily this is due to false optimism about the US Presidential election outcome. No idea what the connection is! A reputed analyst suggested if the stock market is at its highest now since late 2007, inspite of the corporates barely able to squeeze any top end growth, he thinks the slightest 4th quarter good news can catapult the markets higher. This seems ridiculous and may be short lived. Remember we have not done anything for the fiscal cliff that is right around the corner. Its a daunting task and the can is getting kicked down the road. Added to this, unemployment signs are not encouraging, entitlements are gett

In my recent visit to India, I was more disillusioned than delighted to see the rate of the civil society changing. Numerous people, presently, in my estimate 6 out of 10 have leaped out of deprived riches and money in the last 4-5 years. They have just been bestowed with this sudden wealth that can pale what people have in developed economies! The wealth-building is good but there are collateral damages to society. One of the most disturbing trends I noticed was that there is a terrrible decline in respect, decency and moral values in civil society. I call this phenomenon "PEOPLE'S RACE TO THE RICHES LEADING TO A MORAL RACE TO THE DITCHES". I can identify three reasons: 1) Indians are hard working, and take care of their family to the fullest possible extent, but, this has eroded, because money is easier to come by than before. Hard work and little money has given way to easy work and fast & big bucks, sometimes even at the cost of (extrended) family's wel

I heard this very interesting but near prophecy-like podcast by Peter Day of BBC in the program "By our own correspondent" yesterday. http://www.bbc.co.uk/iplayer/console/p00pjgll What struck me the most was the almost unstoppable boom in China is showing signs of just slowing but possibly bust. Can you believe there is already a ghost town with many flats in several apartment buildings which doubled in prices recently are unoccupied in Mongolia in a town called Ordos. Several shops are empty and local money lenders are out of business and financiers have either ran away or disappeared. See the picture below: This audio-documentary is quite a earful. Not sure if its an indication of the near future of China, atleast you can't say no one told you.  

I have to admit the market upswing was more than anyone expected, leave alone my prediction in January 2012 end. Not all analysts agree that this will be the trajectory stock indices will take for the rest of the year. Some fear the following probable negatives could derail the upswing: 1) a possible Iran conflict, 2) continued current Chinese slow down and 3) Greek crisis & European contagion. At least we can say with relative confidence that the double-dip recession is not a threat. Stocks are a leading indicator and from the way it looks we are going to be in the thick of business activity within this year end. Usually presidential election years are a positive year for stocks. Already several pockets of the US are beginning to have full bookings of hotels, resorts, etc. and skilled labor force is busy till the end of the year. If the summer does not scorch the stocks for any reason, we should well be seeing the economy rebound in strength. After all, these boom and bust cycl