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Latest from the editor’s desk
Blogs
Is Facebook the “New Normal”?
Investors have a clear choice now. Move money out of the low growth, problem riddled world into the high growth world of technology and Internet. High growth comes with risk but this risk is worth it as the other option is downright useless. Read full blog
Why i am not going to talk about Greece from hereon?
Greece will probably be the most searched word in Google. I should be talking about Greece and its catastrophic effects on the world and India, as it will help drive traffic to investorsareidiots.com. But I am not going to talk about Greece as it takes my focus away from helping investors make money. And Greece will not help make money! No more Greece word from hereon. Read full blog
When a hedge is not a hedge
The word “hedge” is a misused word and where it is supposed to protect an asset against risk, hedges actually causes more damage to the asset. Hedge is defined by investopedia.com as “Making an investment to reduce the risk of adverse price movements in an asset”. The definition cannot be further from the truth. The most recent example of a hedge going wrong is the USD 2 billion (will go up to USD 3 billion soon) loss suffered by JP Morgan by its risk managers. JP Morgan’s trading desk that was responsible for investing excess cash held by the bank, put on huge hedge positions in synthetic credit derivatives, supposedly to protect the banks credit portfolio. Read full analysis
Latest issue-Newsletter “Investors are Idiots” fortnight of 15th May 2012 Issue 23
1.Identifying the Indian Apple-Part 7 IT Stocks
In this issue of “Identifying the Indian Apple” series we will analyse IT stocks that are largely in the Rs 1000 crores to Rs 9000 crores range. Three stocks stand out in the current analysis for “Identifying the Indian Apple”. The stocks will not deliver “Apple” like returns but have the potential to deliver above average returns. Three stocks stand out of the pack listed in Table 1. Read full analysis
2.How to profit from a weak Rupee
A weak INR suggests that the Indian economy is going through a painful adjustment process. In this process there will be consolidation in sectors with the strong, healthy businesses gaining in strength at the cost of weaker businesses that have leveraged balance sheets and poor business models. Read full analysis
3.How to spot an investment quack? -Ravi series 15
Ravi’s cousin, Anand on the other hand did not have a good advisor and had lost a lot of money listening to advice from so called experts. Anand took advice from so called experts writing in print and web media, from experts talking in electronic media and from distributors who sold him worthless financial products. Read full analysis
4. Economic Analysis May 2012
RBI’s bond purchases is seen as a quasi monetary easing as bond purchases add primary liquidity into the system. Hence the central bank may wait for further conformation of economic weakness before reducing policy rates in June 2012, unless the May data is extremely weak warranting an emergency rate cut. Read full analysis
Currency market analysis
Do not obsess over the falling Rupee
The hue and cry over the Indian Rupee (INR) as it fell to record lows of Rs 54 to the USD is even more than India crashing out of a major cricket tournament. Calls for the RBI and the government to intervene to protect the INR from falling further are as high as baying for cricketers, selectors and administrators blood. The fact is India manages to come back in cricket and will manage to improve its macro economic fundamentals, which will actually be helped by a weak INR. Read full analysis
Learn to be your own fund manager series 3 -How to restructure your portfolio?
Manisha’s portfolio required reducing the number of securities held in her portfolio and tweaking the asset allocation based on her own understanding of the markets. Manisha was bearish on interest rates and bullish on gold. She was neutral on equities though her preference was towards equity investments. She did not require liquidity and cash holdings did not serve any purpose to her portfolio. Read full analysis
Weekly market analysis-week ended 11th May 2012
Equity market analysis- Negative inflation data will pull down markets
India Inflation for April is expected to come in at 6.7% against 6.89% levels seen in March. Inflation coming in around or below expectations could raise rate cut hopes leading to market stability. However inflation above expectations will pull down markets further as it will add to the current weak sentiment. Read full analysis
Fixed income market analysis- Outlook turning positive for bond yields
Bond purchases by the RBI and weak IIP data have turned the outlook for bond yields positive and benchmark bond yields should trend down in the coming weeks. Ten year benchmark bond will see yields fall from current levels of 8.56%. The issue of a new on the run ten year bond to replace the current benchmark bond the 8.79% 2021, which is expected in a couple of weeks time will see the cut off in the auction coming in around 8.30% to 8.35% levels.Read full analysis
Views
Greeks and UPA should read this story
India is also a part of the ant and the grasshopper story. In India the ant is the people who work hard and save money for the future. The government on the other hand is the grasshopper that lives off the savings of the hard working Indian. Read full article
Relax, it’s not as bad as doomsayers make it out to be
No, doomsayer’s predictions will not come true and the world will get on with it albeit a few hiccup. It is the market sentiments that are giving rise to gloom and doom predictions and these predictions will disappear once markets get back to normal. Read full analysis
Classroom
Tutorial on equity investments
Tutorial 21. Ratio analysis- Using Market Capitalization and Enterprise value ratios
In this tutorial we will learn to use market capitalization and enterprise value ratios. In the last tutorial we studied the various valuation ratios.
Tutorial on fixed income investments
Tutorial 21.Characteristics of government bonds
In this tutorial we will study the characteristics of government bonds In the last tutorial we learnt about RBI policy tools Government bonds are fixed income securities issued by the Government of India (GOI). The total outstanding bonds issued by the government as of 31st March 2012 is Rs 27 lakh crores. Government bonds have the following characteristics: Face Value, maturity date, coupon, coupon frequency and coupon dates. An example of a GOI bond is given below. Read full tutorial
RBI Policies
Bond prices and Rupee will gain on OMO announcement?
In the near term bonds and the Rupee will react positively to the OMO announcement as bond markets will not fret on absorbing weekly supply of Rs 15,000 crores while the currency market will see the move as prospects of aggressive intervention by the RBI. The question is whether RBI will come out with more OMO’s or is this one just a signal to the markets that the central bank is watching the situation and will step in when necessary. Read full analysis
Currency market analysis
Why RBI will not arrest the Rupee fall?
Traders looking to go long the INR on hopes of RBI intervention will be disappointed and will be stopped out as the INR weakens further. It is best to follow the INR course and be short the INR till it stabilizes at some level and this could be in the Rs 54/55 level in the near term. Read full analysis
Link between currencies, commodities and equities series 19- Do not worry about a falling Rupee
The economy will adjust to the new Rupee levels over a period of time. The differentials with the US economy are wide enough for the Rupee to stem its seemingly free fall. India is growing at 7% while the US is growing at 2.5%. US Federal Reserve (Fed) rates are at close to zero percent while RBI’s repo rate is at 8%. Ten year bond yields in the US is at 2% while in India it is at 8.6%. True macro economic differentials alone will not help the Rupee, but investors will at some point of time go back to searching for higher yielding currencies.Read full analysis
Link between currencies, commodities and equities series 18-Gold prices in an artificial bubble in India
Government or regulatory policies on gold will not help in curbing gold prices or gold demand. Policy makers should instead focus on bringing the macro economy back to an even keel with inflation, fiscal deficit and current account deficit under control. Once that happens, financial asset returns will improve leading to some movement away from gold by Indian consumers and investors alike. Read full analysis
Learn to be your own fund manager series 2 -How is your portfolio structured?
There are three parts to your investment portfolio. The first part is broad asset allocation, the second part is allocation of securities within an asset class and the third part is the basis of allocation of securities. Asset allocation is pushed to you from all fronts- financial planners, financial advisors, financial experts and the media. The allocation of securities and the basis of allocation of securities is actually the most vital part of your investment portfolio and these two factors unfortunately are given a back seat. In fact if you get the second and third part of your investment portfolio right you need not worry about the first part. Let us find out why? Read full analysis
S&P downgrade can even lead to a market rally
It is not cast in stone that the economy will continue to behave the way it did last year. That fact that the unthinkable happened when Chelsea beat Barcelona in the champions league semi-final should make investors believe in the unthinkable. Read full analysis
Fixed Income
Revival in corporate bond market?
The corporate bond market saw a spurt of activity on the 23rd of April with Hindalco and Tata Steel privately placing ten year debt at 9.55% and 9.80% respectively. The amounts placed was Rs 3000 crores for Hindalco and Rs 1500 crores for Tata Steel and both the placements were taken up by the underwriters. Hindalco is rated AA+ by CRISIL while Tata Steel is rated AA+ by CARE and the spreads over the corresponding benchmark ten year government bond were 80bps and 105 bps respectively. Hindalco bonds carry a coupon of 9.55% while Tata Steel’s bonds carry a lower coupon of 2% and the bonds are issued at discount to face value. Low coupon bonds are attractive for FII’s as the withholding tax amount is lower. Read full analysis
Personal finance
Direct transactions can save you a lot of money
Investors should actually use the web services provided by a mutual fund or insurance company. The cost of buying an insurance product is cheaper by more than 20% and you can save upto 40% if purchased directly from the insurance company. Similarly mutual funds can actually reduce expenses for investors transacting directly with them. Mutual funds and insurance companies should encourage investors to transact directly with them by providing transparency on the products and by giving sops such as lower expense ratios etc. Read full analysis
RBI April 2012 Annual Policy
Government interference in banks harms borrowers
Media headlines are screaming on the government directive to banks to reduce loan rates. The fact the RBI cut the repo rate by 50bps in its annual policy for 2012-13 is seen as a signal for banks to lower lending rates. If media headlines hold true, the government is forcing banks to pass on the rate cuts to the borrower in order to spur consumption and investment in the economy. The government in its misguided belief is trying to pass through monetary policy into the system so that rate cuts take effect immediately. Read full analysis
FD rates will fall quickly post policy
The higher than expected 50bps repo rate cut by the RBI will make banks re-price their deposit rates downward. The reason is that borrowing costs for banks in the overnight markets will be 50bps lower at around 8%, which is the repo rate and RBI has given banks leeway to access the MSF (Marginal Standing Facility) at 9% by letting them go below 2% of their SLR (Statutory Liquidity Ratio) limit. Read full analysis
Equities and bonds will cheer RBI but with a lag
In the medium term the Sensex and Nifty will trend back above 18000 and 5500 respectively from current levels of 17,200 and 5250 while bond yields will trend down to 8% levels from current levels of 8.4%. Read full analysis
RBI satisfies all including itself
The 50bps rate cut has also shifted the focus away from the RBI, as both the government and the markets cannot look towards the RBI for help when things go wrong. RBI can go about its job of assessing the growth and inflation situation without any pressure from external forces. Read full analysEquity
Infosys- what should you do now?
Infosys gave an extremely defensive guidance for revenue and earning growth for the financial year 2013. Revenue growth in USD terms is slated at around 8% to 10% while in Rupee terms it is projected at 14% to 16%. Earnings per share (EPS) growth in USD terms is expected at 4% to 5.7% and EPS growth in Rupee terms is expected at 9% to 11%. The revenue growth of 8% to 10% is below industry estimates of around 14% and this has spooked the markets. Infosys share price fell 12% post guidance announcement. Read full analysis
Blogs
Look beyond the government to make money
Will the monsoons be normal this year? No because the government has displeased the rain gods. Well the last one is just to add humor but the fact is that markets are blaming the government for its underperformance. Markets cannot go on blaming the government for all its woes, it has to take responsibility for its actions and look beyond finding a convenient scapegoat. Read full blog
Personal finance
So, why are you invested in PSU stocks?
The past performance does not suggest good gains and the current government’s stance on PSU companies do not instill confidence. If there is some other good reason to stay invested in PSU stocks we all would like to know the reason. Read full analysis
Five questions Fidelity equity fund investors should ask
Fidelity’s Indian mutual fund business has been sold to L&T AMC (Asset Management Company). Investors in Fidelity’s equity schemes will now have a new fund manager as Fidelity has retained its equity team. The question all investors will ask is whether to stay invested in the equity schemes of Fidelity or to exit on the change in fund managers? The answer to the question of staying invested or exiting lies in the five following questions. Read full analysis
Equity
Why commodity stocks will not do well in this equity rally?
The trend of outperformance of equities led by knowledge stocks will continue going forward given the positive outlook for the US economy as well as given the weak growth outlook for growth economies such as China and India. Read full analysis
Fixed Income
Equities and bonds will do well as yield curve steepens
The inverted nature of yields curves across government bonds, corporate bonds and interest rates swaps are set to see a change with yield curves steepening across the three segments of the fixed income market. Steepening yield curves are good for investments in short term fixed income instruments that are marked to market. Read full analysis
Equity
Five ways to beat political risk in investments
The biggest risk faced by investors in Indian equities, bonds and the currency at present is political risk. Political risk exists in the form of worry on mid term polls at the center, lack of sound fiscal policies, mismanagement of states, cases of scams and corruption and the media blowout of any political issues. Investing when political risk is high is tricky as short term volatility could kill future investment appetite. Investors should learn to navigate political risk rather than stay off investing. Read full analysis
Currency
2012 the year of the USD
Markets were at one point of time building in scenarios of a collapse of the USD, leading to hectic speculation on commodities and emerging asset classes. Markets will now have to build in a scenario of a strong USD. Before going into the repercussions of a strong USD on world economies and markets, a case for a strong USD has to be made. Read full analysis
A strong USD will drive equities higher
A strong US Dollar (USD) will lead equity markets higher in 2012. The US economy is looking the best amongst the worst and that includes India and China, leading to the US equity markets and the USD being the best performers since the beginning of August 2011. August 2011 was the month when debt problems in the Eurozone and inflation issues in India and China hit peaks leading to the beginning of a collapse of equity and currencies across the world. Read full analysis
Equity
Bet on India but be smart about it
Investors should look forward to more positive sentiments in markets but given that this time around, the conditions for a market rally are different. They should be choosy about their investments. Read full analysis
Fixed income investing series
Invest in mark to market funds
Fixed income investors will gain more by investing in mark to market fixed income mutual fund schemes rather than by investing in fixed return products such as FMP’s (Fixed Maturity Plans), fixed deposits or government run savings schemes. Mark to market mutual fund schemes are schemes that invest in government and corporate bonds of varying maturities, and the prices of these fixed income securities will move up or down depending on movements in interest rates. Read full analysis
Economy
Greek debt swap- what is it and what does it mean for Indian markets?
Greece has effectively reduced its debt by Euro 100 billion and has secured Euro 130 billion of bailout funds from the EU (European Union). Greece has achieved the debt reduction and secured the bailout funds by swapping existing debt of Euro 206 billion for new debt. Read full analysis
Personal Finance
Insurance ads are completely misleading
One has yet to see a smile on any person who has taken an insurance policy. There are only cribs on the kind of returns that are seen and the fact that most of the insurance policy holders were sold policies by pushy agents and not bought for a specific need. Read full analysis
Equity
What should you do as a shareholder of Sesa Goa or Sterlite?
How to view the Sesa Goa and Sterlite merger? Vedanta is merging Sesa Goa and Sterlite and this merger leads to many implications. Read full analysis
Blogs
“Satta Sells”
“Satta” sells in India and the success of the MCX IPO is a thumbs up sign to the average Indian punter who is willing to gamble small amounts of money to satisfy his or her urge to do “Satta”. Satta can be defined as a bet on anything, whether it is a cricket match, horse race, card game or markets such as the commodity, currency and equity derivative markets. Read full blog Fixed income investing series
Understand your fixed income investments part 2- FMP
The return from FMP’s come from the yields of fixed income securities that correspond with the maturity of the FMP. Hence a 91 day FMP returns will be slightly below that of the traded yield of a 91 day maturity fixed income security. The reason an FMP return will be below that of the traded security is due to the expenses charged by the scheme, which in case of FMP’s should be low. Read full analysis
Understand your fixed income investments part 1-Liquid Funds
Do you understand your fixed income investments in mutual funds apart from the returns offered? Fixed income is not as safe as it sounds and you should know where your fixed income returns are coming from when you invest in a fixed income product of a mutual fund. Read full analysis
Inflation is down where should you invest?
Now with inflation coming off, investors can hope to earn real positive returns on their investments. Inflation is expected to stay at below 7% levels for a few months as per the country’s economic advisor. Investors target for post tax returns for the next couple of years should be over 7%, assuming that inflation stays at below 7% levels. Read full analysis
Equity
Be prepared for violent market swings in an “unhappy” rally
The question is will markets continue on its upward trend despite the negatives that investors are seeing and feeling? Liquidity by its nature tends to overcome anything on its way and markets may well continue on its uptrend. However the ill effects of liquidity are many and that includes high oil prices and rising inflation. In such a liquidity driven market where fundamentals are yet to catch up, investors should be prepared for violent market swings. It is best to sell when others are buying and buy when others are selling in this market. Read full analysis
Five macro risks India faces in the near term
The five macro risks that could derail markets in the short term are 1) Election results in states that could derail a good budget 2) Global liquidity driving inflation higher leading to RBI targeting inflation 3) Austerity measures in Europe leading to a recession in the Eurozone 4) Poor monsoon forecasts and 5) China facing more economic headwinds. Read full analysis
The Japanese Yen can lead equities higher
A falling Yen can be interpreted in two ways, a) The flight to safety trades is going out of the market and b) Yen is starting to be used as a funding currency. Read full analysis
MCX IPO is not for long term Portfolios
MCX (Multi Commodity Stock Exchange) is opening its IPO (Initial Public Offer) on the 22nd of February 2012 and closing it on the 24th of February 2012. What should you do? The MCX IPO will not add value to the company, though it will help existing shareholders to rake in the gains of listing. New shareholders have a lot of headwinds facing them including issues of promoter group bad investments and rising completion that could kill margins. MCX is not for long term portfolios though short term gains are on the cards given market euphoria and the hype over the issue. Read full analysis
Personal finance
What can mutual funds learn from Fidelity’s exit?
In short Fidelity did the right things but did not do the right things for India. However regulations have improved (no the industry is not overregulated as many of the culprits of past excesses may say) and the industry is now a more level playing field for players wanting to play by the rules. Read full analysis
Equities are up, are you happy with your portfolio?
Should you switch back into equities? The answer lies in your own investment preference. If you are inclined towards equities and have usually been allocating a larger part of your portfolio towards equities, you will have to re-balance your portfolio to reflect your investment preference. Read full analysi
Economy
Warning signs you should note
Investors must watch for these signs and monitor them closely. Some of these warning signs may remain warning signs while some of them will act up. The best way to react to the warning signs is to either reduce exposure or book profits continuously if markets continue to move up. Read full analysis
Corruption factor should not be the reason to buy property
In fact the corruption factor has become a selling point for builders while investors justify paying high prices citing corruption. Buying property based on corruption factor can only lead to disaster. Read full analysis
Yes property prices can go down and stay down
Investors in property will say prices will go up while end users will say prices will come down. If end users do not buy property on expectations it will come down or due to unaffordability factor, investors will have to search for another investor to buy (greater fool theory). If another investor does not come along, investors will then have to sell at a loss (either absolute or in terms of opportunity cost). Hopefully investors lose and end users gain. Read full analysis
Equity
The sovereign debt crisis is not over but broad equity uptrend will continue
The markets will not correct significantly despite the sharp rally from November 2011 given the liquidity provided by the ECB, which will keep bond yields in check in the Eurozone and given the expectations of monetary easing in China and India, which will provide impetus to growth in these countries.Read full view
Avoid speculative stocks in this rally
The equity market rally over the last thirty days have been led by speculative stocks rather than fundamentally sound stocks. The performance of indices given in Table 1 shows the sharp rally in sectors such as real estate and infrastructure and the relative underperformance of the broad market (Nifty) to these sectors. Read full analysis
Personal Finance-Investing in bear markets
Treat extreme pessimism as your friend
It is going to be difficult to put a time frame for this bear market to play out but it may well be sooner than later. Investors should not wait for the end of the bear run to invest, it is better to invest closer to the end of the bear run and this may well be now. Read full analysis
Bear downside risk for above average returns
Bear market turnaround happens without one realising it. Prices will first stagnate at lower levels before trending higher. Oversold markets will see sharp rises from lows at first before stabilising and then again trend up as more investors realise value in stocks. These are actually the first signs of a bull market and investors will have to have conviction to catch this initial bull phase of the market. Read full analysis
It’s the 1990’s all over again and there is hope
Markets will be volatile in the short term, but as the dust settles and effects of right policies tell on the economy, markets will look to factor in a stronger period of growth. This process could take at least six months and until then it will be a tough time for investors. Read full analysis
India will do better in 2012
Can India do better in calendar year 2012 in terms of market performance? The positives for India going into 2012 are prospects of inflation and interest rates coming off and softer monetary policy across emerging economies. The negatives for the country going into 2012 are weak government finances, lower growth on spill over effects from 2011 and no resolution to the Eurozone debt crisis. Predicting the way the positive and negatives pan out is an imperfect science, but if one goes against extreme pessimism which is ruling the markets at present, one can predict that 2012 will be a better year for Indian asset classes. Read full view
Economy
Euro will become a carry trade currency
The last one month has seen the Euro fall by over 5% against the US Dollar (USD). The Euro has come off from USD 1.34 to USD 1.27 since the beginning of December 2012 to date. Equity indices in the same period have been positive to mildly negative across geographies. Read full view
Is India managing capital flows, currency and interest rates properly?
No country which opened up to foreign capital has been able to avoid this dilemma or rather trilemma in international finance called the “impossible trinity”. The “impossible trinity” concept says that with open capital flows, a country can have control either over the exchange rate of its currency or local interest rates, but not both simultaneously. Read full analysis
Rupee fall is the best thing that could have happened to India
India has to reconcile to the fact that unless the stakeholders (read politicians, businesses, regulators and the average Indian) work towards a stronger economy, it will not happen. The currency markets are giving a clear warning that India cannot expect money to flow in to the country irrespective of policies. Read full analysis
RBI funding government profligacy is harmful down the line
RBI buying of government bonds, for whatever reason, whether to fund the government or to add liquidity is seen as supporting a government that is not able to control its finances. The present government is tagged as non reformist with policy paralysis and a central bank supporting the government’s borrowing program will be seen as toeing the government’s line rather than following its own monetary course. Read full analysis
Liquidity easing or deficit financing?
The question to ask is, is implied deficit financing better than implied monetary easing measure? The answer is no. Implied deficit financing sends out completely wrong signals to the markets. The first signal is that the market will perceive that the RBI is carrying out quantative easing measures, which is negative for both inflation and the currency. Read full analysis
2012 will be a year of austerity and it is positive for markets
One prediction than one can confidently make for the calendar year 2012 is that “austerity” will be the key word for nations, corporations and common people. Nations will adopt austerity measures to bring down debt, corporations will make austerity the theme to cut costs while the common people will be forced to adopt austerity on the lack of availability of debt. Read full analysis
Central bank liquidity will flood the markets in 2012
High global liquidity infused through central banks is not an ideal scenario as the liquidity is artificial and if withdrawn can cause havoc in markets. However till such time as the liquidity is being provided, markets will tend to use it for speculation and that would mean rising asset prices. India will be one of the beneficiaries of this liquidity. Read full analysis
Corporate India deserves what it gets from the government
Corporate India deserves what it gets from this government, as the current form of the government is the making of corporate India. The frenetic bull run post the election of the UPA government in 2004, saw a flood of money coming into the country and the corporate sector lapped up this money, thinking it was cheap. FII’s brought in close to USD 40 billion in the 2004-2008 period while Indian corporates raised USD 20 billion though FCCB’S (Foreign Currency Convertible Bonds). Read full view
Eurozone crisis is a wake up call for India
RBI has been consistently warning the government on its fiscal profligacy as it impedes the process of monetary transmission. However, despite warnings the government has steadfastly refused to implement any kind of reforms on food, fuel, fertilizer and power subsidies as well as making no progress in improving the tax to GDP ratio. Read full analysis
Personal finance
Investors have to feel protected by regulators
Regulators must not only punish the guilty in capital market frauds but also make sure that the investor who is the ultimate victim of the fraud is able to recover part or whole of the losses suffered. Recovery of losses sustained due to fraud will give more confidence for investors to invest in capital markets. Read full analysis
Learn to take care of yourself first when investing
What is similarity between a politician wooing a voter and the financial industry wooing an investor? Both end up being dumped once they have done their job. The politician dumps the voter after the voter has voted for him and the financial industry dumps the investors after the investor has invested in a product or service. Read full view
Fidelity exit is a thumbs down for India and MF industry
Fidelity one of the largest fund managers in the World is looking to exit India. The exit plans of Fidelity poses two questions a) Is India relevant for big fund managers? and b) is the mutual fund Industry in India not an attractive proposition? Read full analysis
Do you know you are being bought by AMC’s?
SEBI should make all commissions paid by AMC’s for distributing the products known to the investor. For example if an AMC is paying 3% as commission for selling a product and the total management fee on the product is 2.25%, the investor should know that the AMC is willing to take a hit on its books in order to acquire the customer. The Investor should then decide whether he wants to be acquired or not. Read full view
Is your fund manager making money for you?
The only return that matters to you is the return on your investments. The return on investments is easy to calculate. If you had invested a sum(s) of money at one point of time or over a period of time, the investments should have yielded a) positive returns b) positive returns that have beaten the opportunity cost of investing in a similar asset class elsewhere. Nothing else matters. Read full article
Is your fund manager making money?
Cartoon from Reader’s Digest that says it all! 
Mutual funds making consistently low or even no profits, cannot invest for growth down the line. They will find it extremely difficult to attract talent, their sponsors will not have the money to hold on to loss making vehicles for long periods of time and investors in these funds will suffer. Read full article
Currency View
INR will rally from Rs 51 levels
Indian Rupee short term bearish long term bullish
The question is how much further will the INR weaken and will it reverse trends when things settle down. The answer to the first question is difficult to pinpoint as risk aversion trades can take irrational proportions. The dust can settle anywhere between Rs 48 to Rs 52 to the USD if the INR selling gains momentum. The answer to the second question is easier, the INR will strengthen once risk aversion trades start reversing. Read full view
RBI’s communication on the currency should improve
Articles
Retail FDI-Let the consumer decide
The big debate on retail FDI is completely off the track and unwarranted. Headlines of ‘mom and pop’ stores losing business, loss of living for many retailers etc. does not have any justification. If the consumer prefers to buy in the mall, he does so because of prices and not due to anything else. The local retailer will have to bring down prices that are close to prices offered in the big stores to survive. Read full article
Forced reforms is the right way to go
The opening up of the Indian retail sector to the world players by allowing 100% FDI in single brand retail and 51% FDI in multi brand is a sign of more forced reforms to come. Read full blog
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