Friday, June 7, 2013

The Fall of Gold & the Rise of Stocks!

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." - Warren Buffet

Why is the price of Gold plunging? The overall sentiment has turned against the precious metal. Many have called it the end of the gold bubble. As a result, the  
number of gold bears has gone up dramatically. When I look at the bullion market I see too many short sellers crowding in. And all hopes are now pinned on a 'sustained' global economic recovery. In fact, the US dollar has strengthened in recent times backed by hopes that the economy is set to recover and the US Fed would gradually wind up its QE program. The stock markets on the other hand are close to record highs in the western countries.

Monday, December 24, 2012

Pension Plans - Are they worth investing in?

I shall get straight to the point - I have not bought a pension plan. (Yes, I don't have one in spite of the ad which screams 'Get 1.5 crore pension on your 55th birthday'). And why do I not have a pension plan? It is not that I think that I can invest better than a pension fund manager (though honestly I can show you later why it isn't too difficult to beat the returns of a pension fund). The simple reason is that you have got a large number of options which could beat any pension fund hands down any day.

Monday, November 12, 2012

The Broken Window Prosperity Myth

I was watching the television last week, watching the extensive damage caused by hurricane 'Sandy' but what really caught my attention was a prominent financial analyst who was happily 'forecasting' all the building, renovation, and infrastructure repairs that would follow Hurricane Sandy. He went on to say that this event would provide the much needed 'boost' to the economy in the region and went on and on with some fancy statistics and numbers to prove the same. Before I go further, just to make something clear right at the onset - Hurricane Sandy destroyed wealth. Perfectly good houses were ruined. Passable roads were wrecked. Decent boats were sunk. 

But this is just another way that some economists give you the wrong idea. They tell you that the GDP will go up as people rebuild and that jobs will increase in the construction sector. "Damage is good because it 'puts people to work' or it 'increases demand'" - say some economists and stock speculators.

Sunday, September 16, 2012

Reforms and QE3 - What you need to know

I haven't seen so much of economic decisions being taken in 2 days as I saw last Friday (14 Sept, 2012). In fact it took me a day or two to just digest all the facts. QE3 from the US Feds and the biggest surprise of all, the UPA government in India after years of policy paralysis, finally pushed through some reforms! The government increased the price of diesel (diesel is a subsidized fuel in India), allowed liberal FDI in multi-brand retail, aviation and broadcasting and allowed divestment in four public sector companies. Just as a columnist mentioned in today's paper - Friday's announcements have all the key words that usually have foreign investors reaching for their wallets - fiscal reform, FDI, multi-brand retail and divestment. Together with QE3, the markets are in a jubilant mood! I expect the sensex to surge in the coming weeks but it is in times like this that an investor needs to take the highest degree of care.

Sunday, July 15, 2012

Want to stay a Millionaire?

"If you want to be a millionaire, start with a billion dollars and launch a new airline" - Richard Branson (Virgin carrier CEO)

Richard Branson's famous joke may seem prophetic to Vijay Mallya of Kingfisher Airlines, who is more or less facing the same situation and the heat of bad economics of owning an airline. However the objective of this article is not to poke fun at the airline industry or discuss its bad economics. I read an interesting piece in another blog which showed another method to lose your money fast - lock it up in your locker and sit tight! Yes, if you do nothing about your money, you can ensure that you would experience a steady decline in your living standards. To illustrate this, just check out this table which was published by Daily Mail,a London newspaper.