Money Talk

In 2012 there were numerous empty apartment buildings in many of the burgeoning Chinese cities leading some experts predicting a collapse of the housing market bubble in China. But, it did not happen! This past week, news shaking the stock markets was from the biggest builder in China, Evergrande, that it was about to default in its liabilities and on Thursday the deadline to avoid default passed without any effect to the world stock markets, on the contrary, the markets went up! One wonders why and what's all this about.  The only explanation for all what seems to happen in China is to be taken with an awareness that China is a very difficult economy to predict with clarity as the numbers available to compute data analyses are generally opaque. The sum of its parts even more difficult to predict. Evergrande, may just be the tip of an iceberg that may involve more than a big chunk of ice.

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 ( 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 sign...

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...

A few important observations this month: Stocks pushing up. Unemployment falling. Manufacturing increased. Growth is more. Fear of US re-recession bleaker. Interest rate at 0 will be unchanged for another 18+ months. New homes increases modestly. Greek debt settlement seems realistic. All these observations surmise and point to an optimistic scenario for the economy and investments on the one side. But this optimism is not shared by many in the financial sector as they don't see all this as a big plus in the short term. The reason: the curve is slow. So slow, that we may still see many failures before things really start picking up steam. But if stock markets are a leading indicator, Dow and Nasdaq and even the S&P are near their post-2008 high. That to me is an indication to take some calculated risk and long selected stocks.

I found this just today. Its a cool virtual play in stocks for 4 weeks. You can play long or short. Two weeks have gone by. Two to go. You can still get in by registering. Cool thing is you can even win prizes if you are the weekly winner, ie, if you are ranked on the top of the investment leader board. Kind of hard, hey, but who cares. You have a virtual cash horde of $120,000 to mess around with. Hope you learn something while having fun....! Go to the link below to enter. http://www.marketwatch.com/game/fet-2011-q4

Eurozone is crumbling, Italy and Greece in sovereign debt crisis, France no better, high unemployment, low consumer confidence, flat incomes, increasing costs, etc. all of these no doubt is the perfect recipe for a pessimistic outlook of the world. IMF chief Christine Lagarde warned today about a lost decade for not just the developed world but for the whole world if wealthier nations don't intervene referring to the Germanys and USs of the world. These are sobering days of the times we live in. Here is atleast one simple solution, that is certain to increase housing demand and thereby can most certainly increase the confidence in the economy. We are at 9% unemployment in the US, which means more than 90% are still with jobs. These people need to be encouraged to spend more. Since the biggest investment for any family is their home, why not start from there. Almost all houses have lost their values by atleast 15% to 50% for no fault of the ordinary people. We ...

A movement that has kept everyone in power guessing where it will go or lead to. A leaderless, rudderless, moneyless movement, but letting their strong feelings out to show they have to do something just like how a baby starts crying if he needs to be cared for. A majority of people in the country and now the world seem to join in this silent revolution, of sorts. The big question is not what these protester are crying for, its what it will eventually achieve. I for one, feel, it is powerful and is gaining traction in terms of at least one important agenda. Sensitizing people on the ills of a overly exploited capitalistic world. Capitalism is unquestionably the best out there, but unchecked capitalism will lead to the exact situations such as these. Disparity of the rich and the middle.Class war. Resentment builds, and an unconnected and unnecessary  chain of reactions result that can be worse than the intent of the revolution. Incidentally, Nobel Prize winning Economist Paul Kr...

Today the world lost a brilliant technology genius. Steve Jobs (56). Sad loss. In March this year he was the 109th richest billionaire in the world. He was rich but not perfect. Read what he said to Stanford graduates in 2005 about a few things that may have made who he became. He always spoke with immense pride about what he and his engineers accomplished at Apple. "Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do," he told the Stanford grads in 2005. "If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on."

Continuing my search for clarity to the economic mess we happen to be in and how and when we may get out of all this, I found this brilliant expose based on a very smart Risk Consultant from Australia, Satyajit Das. Never have seen one of this calibre with the most deepest and clearest analysis. The news is certainly not good, but it is good to know what kind of reality we are in and for how long.....read on... http://www.marketwatch.com/story/5-money-moves-one-debt-crisis-expert-is-making-now-2011-09-29?pagenumber=1

I like when there is hope. How about you? I like when there is energy. How about you? If you want to learn where we can see one and how we can develop it, read this from the following link. I respect Chris Farrell who narrated it this morning in a program called Marketplace on American Public Media. http://marketplace.publicradio.org/display/web/2011/09/23/mm-its-a-great-time-to-buy-a-house/

We are living in unusual times. A once in a century phase. A rarity. Call it whatever you think best fits the situation. The truth of the matter is its real and its here to stay. What I am referring to is the economic woes of the present times. I am more than convinced that the summary of the present times is leading to most certainly the worst decade of economic opportunity and wealth building. In turn deterioration of living standards. Not just for the middle class but every class from the rich to the poor, in all countries of the world. One could endlessly debate the causes, the strategies, the lessons from history, etc., but no policy maker or political leader or pundit is sure as to which one or combination of measures will work to help us dig out from the hole. Most would agree that if one thing needs to be present for the economy to look up, it is confidence. Consumer confidence! This is at its lowest ebb. Experts are arguing about the approach to raise the confidence. But we...

I was just shocked to read this powerful prediction aired in one of the popular financial website, Daily Ticker. Setting: St. Regis Hotel on Fifth Avenue, New York In Attendance: Financial luminaries and hedge fund managers, including Peter Schiff of EuroPacific Capital, John Tamny of RealClearMarkets, Dmitry Balyasny of Balyasny Asset Management and Scott Schweighauser of Aurora Investment Management Host: The Ayn Rand Institute Occasion: annual "Atlas Shrugged Revolution" dinner When: Thursday night, September 15, 2011 Stunning prediction: ARI president Yaron Brook tells ..... why Rand's devotees believe the global economy is "heading for collapse.....We can buy time but we can't change the outcome". The real problem: .....  is with the philosophical belief our society has that governments can solve problems and more rules and regulations are the answer to our economic ailments. Why: In a nutshell, Brook believes...

Its really weird that when I wrote my Part I on this topic, I had some notes for Part II but how soon my notes become a thing of the past and something new emerges which is more "weightier" than the previous. By now you might have figured where I am going with this. Yes, its the hurricane, Irene. Not just because its a hurricane and it is headed towards the East Coast of the US. The bigger thing is, for the first time in the history of the USA, the Mayor of New York City has ordered evacuations in Manhattan - the financial capital of the world. That's huge, and what with all the power disruptions, infrastructure failures, not to mention the direction the stock market will tend to follow in the coming week/s. Ben Bernanke's talk at Jackson Hole, Wyoming seems dwarfed by the impact of Irene. Anyway he did not have much tangible to offer other than chiding the Congress to act! Who knows what that meant. I wanted to really talk a little about the European Bank crisis. I...

Its been wild to say the least. Economy, Sovereign debt, Budget Deficits, Jobless Numbers, Industrial Production, Consumer Spending, House Prices, Assets, Stocks, Markets, and the list goes on. Every guy on the road knows what these terms are these days because it is being played out in our every day lives. I have hardly heard any assuring voice with a mature thought. It appears education and experience is just as good as a novice's  throw of dice idea of one should do in such a situation for both the short term and long term. I am disappointed honestly at the intelligentsia of this great country (US) and the corridors of knowledge, not to mention the seasoned brains of experience that lay scattered all over the breadth and lengths of this vast land. When we lose money in stocks, retirement funds, we are made to believe we don't have anyone to blame except ourselves because the investment decision is ours. This is a way how corporate and financial managers shi...

World is busy absorbing many recent events, some sad, some good, some extremely good and understandably so. Its no surprise Japan is out of the news radar but not from the realities of the recent nuclear disaster. Many leading auto companies such as Honda and Toyota have had the greatest damage to their bottomline. The damages to the economy is still fresh. No one has the knowledge when these would be restored. Some say 6 months some say more than a year. It is so strange to me that Japan is still able to retain the number 3 position economically inspite of the 10 year long recession. Comparatively, US has almost emerged out of its recession in less than 3 years. That is some resilience. Economic drivers has a big role to play in this emergence. The biggest being the Debt that US has boldly taken upon itself. Its going to be a long time that US will see economic normalcy return. But for now incomes are growing and so also the spending. Lucky for those who still have an income s...

BTN and HOOK I covered in Sep last year have been pretty interesting on the rear view mirror now. BTN has lost about 8% as of now but had been hovering 10% higher or lower from the price point at about $8.20 from back then.  HOOK on the other hand has seen a very good uptick going from about $8 then to above $9 and about 10% but the good news is that its trend is strongly rising while BTN is either flat or moderately lower. Both stocks are in my kitty as good buys even at this price for a yearly gain of atleast 25%.