Wednesday, August 24, 2016

Many more QEs will be coming and could create more volatility

The Fed and ECB and the Bank of England, the Bank of Japan, basically they talk to each other every day. They are the Mafia, the chief manipulators, and we don’t know exactly what is being said. That’s why it creates a lot of uncertainty in the markets, and in my view, undue volatility.

But one thing I’m sure of, before the whole system collapses, the governments and the agents, which are the treasury departments and the central banks, will do everything – everything – to protect the system from collapsing, and in my view, this will involve much more QEs around the world.


Thursday, August 18, 2016

Blame China for our current slowdown

One reason I am negative about the world is that much of the growth in recent years was driven by rapid expansion in China. The Chinese growth will slow down. Indian economy can easily grow, maybe not at 7 per cent per annum, but at 4-6 per cent per annum. Some people say it is very pessimistic. But if you compare 4 per cent growth to 0 per cent growth in Europe and 1 per cent growth in the US, it is actually a very good economic performance. Since early 2016 many emerging markets have grossly outperformed the US.

The valuations in emerging economies are much more attractive than in the US. If you take a horizon of 10 years, you will make more money in emerging economies than in the US. The same would apply to India. The problem in emerging economies including India is that quality companies are very expensive. But in India and other emerging economies there are also lots of companies that have a reasonable valuation. Provided the world doesn't collapse and holds together, emerging economies will do okay.

Tuesday, August 16, 2016

India would benefit from a stronger Rupee currency

In principle, I have advocated that high interest rates are good for India because it implies that the currency is stable, which benefits most Indians. 

A weak currency benefits shareholders, property owners because share values go up. But this is a minority. There are more than 1.2 billion Indians. Probably not even 5 million own shares. The impact of rising share market on the economic activity is very limited. If the new governor is a money printer like Yellen and Bernanke, then the currency will go down a lot. So in local currency the stock market might go up, not necessarily in dollar terms. But for the next 10 years, I would probably rather invest in India than in the US

Thursday, August 11, 2016

I own a diversified portfolio of assets



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