Investing in Property in 2014

In view of the slowdown, property is a poor sector for investment. Long term investors looking to buy property for post retirement self use or for holding periods of over 10 years can enter in select locations, cities and segments and look for bargains.
Certain general rules for real estate investment in a slowdown can be kept in mind.

1. In a bear market, one should select property in prime locations and not in peripheral locations, since prime locations will be the first to reverse price direction and will give the most sustained returns once the bull market returns
2. In a bear market, one should invest for the long term. For property, a time frame of 15 years or more is ideal.
3. Short term flipping for quick gains on leverage should not be attempted in bear markets. This technique is reserved for bull markets.
4. The most depressed prices in distress sales will be in luxury property and in plots. These will rise the most when the market turns. Deep pocketed investors with the ability to pick up the distress sale and holding through the uncertainties of the bear market will reap the maximal rewards. Deep pockets and lack of leverage will amplify returns in bear markets – thus bear markets make the rich even richer because they alone can afford to buy and hold. This is in contrast to bull markets where short term holding and leverage amplifies returns and risk takers benefit rather than long term holders.
5. The safest investment for middle class investors in a bear market is already built ready to register flats in the affordable segment in the main central areas of the city with existing infrastructure
Luxury property as a whole is better avoided for the year 2014. This is because prices are already high and it is better to wait for lower prices and for bargains to emerge. As the luxury flats booked by investors slowly get completed, investors will be ready to negotiate with bargain hunters.
Plots are also avoidable because of the existing high prices and the lack of performance in plots in the central areas of Gurgaon even during the bull market of 2010-2012. The higher prices for construction of builder floors on plots has made them expensive and out of reach for many. Buyers are also preferring to live in apartment complexes due to better security and amenities. As such, a changing preference of people over time makes it difficult to extrapolate previous price behavior of plots in the past 50 years. Waiting for better bargains but also actively looking for bargains would be prudent for property investors.

Property in the affordable range of 2500 to 5000 psf range will be the best segment for entry, for both end users and investors, due to limited downside.

The main requirement for a boom in property market is a recovery from the current industrial recession. Until the industrial revival generates more well paying jobs, the real estate market cannot revive. The industrial revival is likely to happen in the next 2 years based on cyclical factors, however the strength of the industrial revival is crucially dependent on the general elections of 2014. A strong decisive pro-industry government will cause a dramatic improvement in the industrial climate and a sustained stock market performance followed by an equally sustained real estate market performance will follow. A fractured mandate will cause a weak revival but consequent turbulence in exchange rates can have unpredictable results on real estate price inflation. High imported inflation, escalation of raw material prices, escalation of capital cost etc can have paradoxical results in the real estate market by making the cost of new construction prohibitive. Existing property which is registered may therefore become more valuable while under construction projects might be abandoned.

-from Indian RealEstateForum

On Trading,Balls and Brains

There’s a trading culture out there that encourages risk-taking. A lot of this culture is tied up with the culture of masculinity. To be willing to take big risks is to have “balls”. Taleb himself has encouraged this idea, writing that “Those with brains but no balls often become mathematicians; those with balls but not brains join the mafia; and those with no brains and no balls become economists.” When asked who has “both brains and balls”, he replied that it was “traders”.
Sadly, this culture of testosterone-fueled risk-taking overconfidence is terrible for the average investor, as Brad Barber and Terry Odean have documented. Balls interfere with brains. They make you you believe you have better information than you have – in other words, they make you ignore risks. That’s probably why women, on average, make better traders than men. (And overconfidence is only exacerbated if, out of testosterone-fueled aggression, you angrily defend every single trade you ever made.)-from NoahOpinion

Indian IT CEOs are shuffling decks on the Titanic

Now I am ready to declare the end of the line for Indian IT. There are new $100 billion opportunities that could revitalize this industry. But from what I’ve seen, Indian executives seem incapable of steering their ships in the right directions.

It is not that Indian outsourcers have become less capable of servicing Western needs. It is that their customer base—the CIO and IT department—is in decline. With the advent of tablets, apps, and cloud computing, users have direct access to better technology than their IT departments can provide them. They can download cheap, elegant, and powerful apps on their IPads that make their corporate systems look primitive. These modern-day apps don’t require internal teams of people doing software development and maintenance—they are user-customizable and can be built by anyone with basic programming skills.

It takes decades to update legacy computer systems, and corporate IT departments move at the speed of molasses. So, Indian outsourcers have a few more years before they suffer a significant decline. They certainly won’t see the growth and billion-dollar outsourcing deals that have brought them this far.

The same advances that are changing the IT landscape are also creating new opportunities.

For example, advances in robotics, artificial intelligence (AI), and 3D printing are making it cost effective to move manufacturing back from China to the U.S., Europe, …and India.

Take the Baxter robot from Rethink Robotics. It has two arms, a face that displays simulated emotion, and cameras and sensors that detect the motion of human beings that work next to it. It can perform assembly and move boxes—just as humans do. It will work 24 hours a day and not complain. It costs only $22,000. This is one of many such robots

A type of manufacturing called “additive manufacturing” is making it possible to cost-effectively “print” products. 3D printers can create physical mechanical devices, medical implants, jewelry, and even clothing. The cheapest 3D printers, which print rudimentary objects, currently sell for between $500 and $1000. Soon we will have printers for this price that can print toys and household goods. By the end of this decade, we will see 3D printers doing the small-scale production of previously labor-intensive crafts and goods. In the next decade we may be 3D-printing buildings and electronics.

In my discussions with Indian CEOs, they all acknowledge the reality. They are becoming aware of what lies ahead. I have implored them to start retraining their people in the new technologies and to develop new businesses and consulting practices. They listen, nod their heads from side to side, and go back to trying to close the disappearing software-outsourcing deals. I tell them that they are shuffling deck chairs on the Titanic.-wrote Vivek Wadhwa,Fellow at Stanford University

Ratnakar Bank is amongst 10 Most Preferred Banks by Indians in 2013

(Disclaimer:I am market making in Ratnakar Bank)

Many financial institutions are gearing up to attract users by offering many incredible services be it loans with low interest rates or saving options upon shopping among many others. But only few succeeded in this rush hour of best banking services offered to the users. Here are the 10 best banks in India that were most preferred by the users in 2013as compiled by Yahoo Finance.

  1. Axis Bank
  2. HDFC Bank
  3. JP Morgan Chase
  4. IDBI Bank
  5. Bank of Tokyo
  6. Bank of America
  7. Deutsche Bank
  8. HSBC Bank
  9. Ratnakar Bank
  10. Bank of Nova Scotia