If that is the case then holding on paper money is also not suggested so it better to buy Gold ETF till stocks are back or currency is stable. I am not sure if we need to hold on to the money we want to invest.
If that is the case then holding on paper money is also not suggested so it better to buy Gold ETF till stocks are back or currency is stable. I am not sure if we need to hold on to the money we want to invest.
We are talking of possibilities and their probabilities here.
Nothing is certain.
Putting too much money in gold would be risky too.
Spreading money across natural resources would be a better idea, but for an Indian investor, there aren't many ways to take benefit of increasing prices of natural resources.
"Everyone" can keep selling for a very long time, much longer than an investor can keep averaging. .
In early 2008, when the Sensex dropped from 21200 to 15300, many had called it a "panic bottom". In a few months, Sensex was in four figures.
In my opinion, the current financial mess in the western economies is worse than the 2008 mess.
In 2008, the problem was limited to mortgages, mortgage-backed securities and banks.
Today, investors are even skeptical about government bonds.
In any country, the debt taken by the government is considered to be the debt with highest safety.
If investors are losing faith in government bonds, then I don't think they can have faith in any other paper asset including stocks.
(That's why gold is moving up every day).
The other side of the story is that the 2008 crisis struck out of the blue and caught everyone off guard thus leading to a massive correction (none of us in the forum were predicting it). The difference now is that the crisis is discussed by every Tom, Dick and Harry I meet. People who never bought a bond in their life are discussing about the bond crisis in US/Euro region.
I think the crisis may strike but the reaction may not be that severe. I am predicting a bottom around 12,000 in the worst case.
Last edited by sudhashbahu : 4th August 2011 at 09:50 PM.
The other side of the story is that the 2008 crisis struck out of the blue and caught everyone off guard thus leading to a massive correction (none of us in the forum were predicting it).
I think the global economy will slip in to a 5-6 year recession.
But at the same time I don't think the Indian markets will drop close to 8000. Right now people are chasing gold as safe haven. But as Indian markets drop to P/E below 15, foreign investor interest in India will rise and we may go to around 12000.
if we just take emotion out and take a look at hard facts
i) US has around 60 trillion of debt (including unfunded liabilities like social security and Medicare)
ii) Almost all the individual states finances of US are in bad shape.
iii) If they reduce the govt spending (which is sensible thing to do !) - it will negatively effect the US economy as now Govt contributes around 12% of GDP.
iv) Almost all of Europe is in bad shape barring (Germany , Switzerland)
v) China economy is very much Investment led and export oriented so can contract severely.
So in a nut shell if around 80% of world economy goes into severe contraction things can go very,very bad - Worse than we can imagine right now.
Stocks crashing or bond market blow up are not that problematic , Civil unrest and breaking down of Law and order is !!!
Imagine , rate of return is not your priority but saving your assets from Mob
is ?
Things can get very very bad - I think to see how bad things would be we wont have to wait too long ! it can very well happen with next 5 years.
I think the global economy will slip in to a 5-6 year recession.
But at the same time I don't think the Indian markets will drop close to 8000. Right now people are chasing gold as safe haven. But as Indian markets drop to P/E below 15, foreign investor interest in India will rise and we may go to around 12000.
My worst case scenario is:
India's GDP would shrink by 1/6th.
China's GDP would shrink by 2/6th.
US's GDP would shrink by 3/6th.
Eurozone's GDP would shrink by 4/6th.
In spite of being an export-driven economy, China would do better than the west because its low government debt and trillions of dollars of reserves would allow its government to stabilize the economy.
Gold would touch Rs 50000 per 10 grams or $5000 per ounce.
(INR would rise against the USD and thus rise of gold price in INR would be less).
Now, this is my worst case scenario.
This is not a prediction.
It may seem improbable, but it's not impossible.
(US did lose half of its GDP between 1929 and 1933).
I recall Warren Buffett's Quote in this situation:
"Be Fearful When Others Are Greedy and Greedy When Others Are Fearful'
Happy Investing
San bhai I read somewhere
'SELL Euphoria and BUY Panic'
Buying oil marketing companies at this time may be good as the crude prices tumbled.
like: HPCL,BPCL,IOC.
Though I am not going to buy this type of panic .
ram.
Last edited by ramkasi : 5th August 2011 at 09:15 AM.
i) US has around 60 trillion of debt (including unfunded liabilities like social security and Medicare)
Even if those unfunded liabilities are not considered, the fiscal situation of the US government is still pretty bad.
Currently, the governments in troubled European economies are borrowing money at anywhere between 6% and 10%+.
If US has to pay 6% interest on its $15 trillion debt, it would mean a cash outflow of $0.9 trillion every year.
The US government has annual revenues of $2.2 trillion.
$0.9 trillion would be 41% of the government's revenues.
US government's Ponzi scheme is at the mercy of its debt investors. The day investors refuse to lend cheaply to the US government, the bubble will burst.
In 2008, I started deploying money in the form of x, x/2, x4.. with every fall. This time I plan to do other way. Already started purchasing in very small amounts. One good thing is - this time the fall doesn't hurts much since I exited 90% of my portfolio around Sensex 19.5k levels to partially pay-off my home loan!
Buying oil marketing companies at this time may be good as the crude prices tumbled.
like: HPCL,BPCL,IOC.
Though I am not going to buy this type of panic .
ram.
Staggered building a portfolio is always good.
Never put whole amount now. But surely one should start shopping in a staggered manner.
When panic starts smart investors start investing and traders start selling.
Happy Investing!
In 2008, I started deploying money in the form of x, x/2, x4.. with every fall. This time I plan to do other way. Already started purchasing in very small amounts. One good thing is - this time the fall doesn't hurts much since I exited 90% of my portfolio around Sensex 19.5k levels to partially pay-off my home loan!
Always remember, this time everyone is already alert and the knee-jerk reaction will be very swift. So in my opinion, the last strategy you implemented is more beneficial now.
US government's Ponzi scheme is at the mercy of its debt investors. The day investors refuse to lend cheaply to the US government, the bubble will burst.
This is not the first time, since December' 1919 and till today they have raised the debt ceiling by 78 times. But don't know why the Market is reacting so bearish now.
Their debt is much higher than Greece (for that matter anybody in the world) but they are not in a queue for bailout.
Somehow US managed their currency to be the International currency and that is the big plus to them. Otherwise by this time US would have been history.
I feel that current crash would push the crowd towards Gold and when everybody is there eventually smart money would move to equity which would lead Gold price to crash.
I survived from 2008 crash though hard wounds are left still but if the same repeats I don't know will I survive this time in the equity market . I mean I hope I don't say goodbye to equity market for ever.
Soros got out in time. So he knows what's planned. Now the big guys go short and later they buy up cheap. Small guys seek haven in bonds and get crashed when they all implode.
How soon do you expect these lows of 12k or 10k or even lower to be hit? Because I was thinking of adding some more yesterday and then today I was wondering what happened. Some time back I think Alchemist had reported a head and shoulders pattern in the index chart.
There was a thread about the US facing a debt crisis and hitting the ceiling on 2nd August, and I think it was in the world markets section but now I can't find it.
Today I tried my best to get some shares but unfortunately sensex recovered at end of the day. Else i would had been able to add new stock for long term in my portfolio like RIL, tata motors DVR and some more fundamentally sound companies in steel and metal sectors.
Anyways i guess its right time to start planning or investing in elss for final time as from next year it won't be part of investment.
Regarding levels. I really failing to understand. It's being said that present market levels is low of some 6 or last 12 months.But if we see at counter like RIL it's trading at its all time low of past 2 and half year. So i feel whether sensex remains at 17000 or 15000 or 12000 or 10000.One should start buying strong stocks SIP way 2-3 stocks or RIL or 4-6 stocks of tata motors etc.Because once a fall happens and a level is given people keeps on waiting.
I remembered last time i made some investment at 17000 levels. and i was ready to invest at 12000 levels. but experts were wait for 10000.When 10000 was near level went to 8000 and then when at 8000 figure went at 6000 but market rebounded to 12000 level and than i didn't had the courage to buy even at 12000 thinking ill be a fool to buy and than again i re-enter at 17000-18000 levels.
One thing is sure USA won't be out of this trouble anytime soon. Even if it does their people won't forget this mess and their economy will turn to save type from plastic money spending side.
Alchemist your post that gold will touch 50000 but won't be expensive in INDIA.I guess you meant Gold touching 2500 dollars but Indian price will be low considering fall in dollar rates.
No low is too low and no high is too high according to technical analysis. If you think RIL is trading at 2.5 years low and is bound to go higher, imagine DLF trading below its IPO price now.
Buy any stock which is going up once the market recovers. It is better to buy a stock which is making new highs rather than new lows.
If you think RIL is trading at 2.5 years low and is bound to go higher, imagine DLF trading below its IPO price now.
Comparing DLF with RIL.
How can you compare this 2 companies.DLF owner is no longer even part of top 10 rich person list now.
On contrary RIL is still the highest market capital company just above coal India. Have pocket full of cash (I even agree with debts but they do pay their loans).And DLF and some places to restructure their debt they have to sell their land banks also the sector won't see any good light this year that's sure.There is much more blood for DLF. Whereas RIL their gas output is lower which means it will take longer to take out gas then who is in hurry also present rates are not encouraging to their numbers. And another downside is CAG report and most probably very big penalty never seen before. But again they are on 16000 crore cash even throwing 1000 crore and saying they have 15000 crore cash won't make big difference.
Note::If admin thinks this post is not appropriate to the thread please delete it.
I survived from 2008 crash though hard wounds are left still but if the same repeats I don't know will I survive this time in the equity market . I mean I hope I don't say goodbye to equity market for ever.
Hmmm, brings back memories of those painful days from October 2008 and March 2009. Remember ET had a cover page in March 2009, with tagline as "blue chips cheaper than a burger" and people won't buy.
The whole idea of equity markets is which view you would take, but always remember someone is buying against the panic sellers. March 2009 presented huge list of multibaggers ( all most all stocks were multibaggers from that level). Even perennial laggards like Aban ( rebounded from 200+ to 1600+) Phillips Carbon Black ( from 28 to 240+) .
The point I am trying to make is that people who have been through this phase knows the scope and extent of returns that can be generated during those bearish times, hence there will be major buying.
The major difference in 2008-2009 was that people so habituated with the tremendous bull run of 2003-2007 was not at all prepared for the crash and were almost fully invested so they could only hopelessly watch their investments fall.
This time round people are highly skeptical and have hoards of cash and investments in debt/gold to jump to equity as and when there is a crash.
So things might be a bit different this time round.
In my opinion, the current financial mess in the western economies is worse than the 2008 mess.
I beg to differ.
Nobody knew the depth of the problem during 2008 financial crisis. Everyone was scared as there was no clarity on the amount of toxic assets each financial institution held. The knock-on impact on other banks were very hard to predict. This led to drying up of liquidity across the world which subsequently forced all of them to sell (often good) investments to tide over short term liquidity crisis.
In contrast, the current situation is much more open. Almost all the problems with these countries are well known and transparent. How much each nation or bank will lose if say Greece or Spain or Italy defaults is available.
The risks of the 'unknowns' are low this time compared to 2008. I hope global markets will factor-in the possible outcomes fairly quickly and move on.
Personally, I am still 80% invested in equity and do not plan to sell. I am trying to learn how to hedge using futures contracts.
Which stocks can be picked for short-term or long-term at this time?
FMCG and pharma looks to be little safe bets as they are not directly affected or recession doesn't hit it so hardly as people want what they want, they will buy anyhow.
Last edited by magnet : 8th August 2011 at 10:17 AM.
Another news circulating is that France also may face rating downgrade like US. Though many stocks are making new lows I think it's better to wait for "chain of events" to come down and markets to stabilize.
Should we start tracking some stocks which are not export oriented (not dependent of dollars) and based on domestic consumption?
Is It Time for Accumulating?
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Soros got out in time. So he knows what's planned. Now the big guys go short and later they buy up cheap. Small guys seek haven in bonds and get crashed when they all implode.
Linear Mode
