Category: Observations

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Observations

Would Rajat Gupta have been punished in India?

The short answer is No.

Raj Ratnam said this in an interview

“In Sri Lanka I would have given the judge 50,000 rupees and he’d be sitting having dinner at my house. ”

 

If you look at the letters of support given to Rajat Gupta by the likes of Pramod Bhasin,Adi Godrej, Mukesh Ambani etc , it is clear that India Inc thinks Rajat did no wrong and deserves no punishment.

It is fairly scary for a retail Indian investor to know that our corporate captains and even the Indian media thinks insider trading is a victimless crime.

I think the average Indian investor feels that the Indian markets are rigged and they are better off investing their hard earned savings in FDs, gold and realty.

Do you blame them?

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Nifty Observations

Sensex Vs Nifty-The generation gap

There was an interesting discussion at Atma about which index better represents the Indian market-the Nifty or the Sensex.

I find that the answer often depends on the age of the person. For old timers (above 40), the answer is the Sensex.They have spent the better part of their trading lives talking,dreaming and thinking about the Sensex.

For the young ‘uns, it is the Nifty.They trade F&O on the Nifty and can tell you its movement tick by tick.They will be hard pressed to even know what the Sensex levels are.

So when somebody asks you where the market is, the index you quote tells something about you as much as it does about the market !

Categories
Observations

The Koreans must be crazy

Korean investors “invest” or “trade” as per various themes.This takes momentum trading to a whole new level.

A MID-SIZED sized Korean semiconductor firm named DI makes products with distinctly un-sexy names like “Monitoring Burn-in Tester” and “Wafer Test Board”. It has lost money in each of the past four quarters. And there have been no changes to its fundamentals that might explain why its share price should shoot up from 2,000 to 5,700 won (from $1.80 to $5.12) in the space of just three weeks—including another 15% gain today.

But DI’s chairman and main shareholder, Park Won-ho is no ordinary mortal. He is the father of Park Jae-sang, better known as PSY (as in “psycho”). “Gangnam Style”, if you haven’t heard, is now number one in Britain’s pop charts and number two in America. Local retail investors—referred with the derogatory gaemi-deul (“ants”) by professionals—are piling into DI shares because of it.

Quite how they expect the horse-dancing YouTube phenomenon of 2012 to help DI sell more of its Wafer Test Boards is a mystery. But convoluted investor logic is of course not a new thing. DI is merely the latest example of Korea’s “theme stock”

One of the most common themes has been the marriage stock. When the son or daughter of a company owner weds a chaebol family member, an unusually generous wedding gift may arrive. Back in 2009, shares in a firm named Bolak ran up from 2,000 won to 9,000 won after the owner’s daughter married into the family behind LG. The effects were short-lived: Bolak shares now fetch a more earthly 3,110 won.

The upcoming presidential election has created another subcategory of theme stocks. Following Ahn Chul-soo’s emergence as a political force about a year ago, shares in his company, Ahnlab, ran up from about 20,000 won each to a peak of 167,200 won. Since he declared himself as a candidate, Ahnlab has been crashing: now each share fetches 82,000 won. Ahnlab’s price-earnings ratio is still 87, mind you.

–from the Economist

 

We Indians were crazy too…anybody remember K10,Realty and Infra booms ?

Categories
Observations Realty

The retail investor is dead.Long live the retail investor !!

As per Moneylife,

August was a terrible month for the mutual fund industry. Equity funds suffered massive redemptions amounting to Rs5,671 crore and with sales of just Rs3,385 crore, the net outflow of as high as Rs2,286 crore. This has been the highest outflow since February 2012 which saw an exodus of Rs2,809 crore.

 

In a recent article in BS, the national sales head of a large fund house bemoaned “Understanding investors’ sentiments is not easy. It has now become an every-month phenomenon, despite making all possible efforts to retain clients.”

So we have the retail investors deserting stocks and mutual funds in droves.

Now consider the recent press release of Godrej Properties dated Sep 12, 2012,

In a single day, the Mumbai-based real estate developer sold over 1 million sq. ft. of space in its residential project in Sector 104, Gurgaon.
Godrej Properties Ltd. (GPL) (BSE scrip id: GODREJPRP), the real estate development arm of the Godrej Group, today announced that it has sold the entire 1st phase of its residential project, Godrej Summit, in Sector 104, Gurgaon. The first phase of this project had 695 apartments across 1 million sq. ft. of space.

 

As can be seen from the pictures, there is a queue of investors waiting in line to give their cheques.With the current prices of around 5500 psf, Godrej Properties has booked sales of 550 Crores in one day !!

So I guess the retail investor is alive and kicking.

He prefers to stand in line for realty rather than call his broker for equity !!

Categories
Observations Poems

Why forecasts don’t work?

Short Answer:There are too many unpredictables or “known unknowns” and “unknown unknowns”

This reminds me of another great poem by Cavafy called Nero’s deadline

Nero wasn’t worried at all when he heard
the utterance of the Delphic Oracle:
“Beware the age of seventy-three.”
Plenty of time to enjoy himself still.
He’s thirty. The deadline
the god has given him is quite enough
to cope with future dangers.

Now, a little tired, he’ll return to Rome—
but wonderfully tired from that journey
devoted entirely to pleasure:
theatres, garden-parties, stadiums…
evenings in the cities of Achaia…
and, above all, the sensual delight of naked bodies…

So much for Nero. And in Spain Galba
secretly musters and drills his army—
Galba, the old man in his seventy-third year.