Posting views of a boarder of another website. Found interesting wanted to share with all.
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1)What we are seeing now globally is unprecedented.All categories of investors are stuck, whether savvy HNIs, Mutual funds, traders,speculators, short term investors ,LT investors , you name it they are stuck. So you cannot say traders or short term investors have all got out safely. In stock markets people generally talk about the profits they made and very rarely talk about the losses they have taken.
2)All the above categories have seen their stock market investments erode 60 - 90 % depending on at what time and in what counters they invested.
3) Now the road ahead :
- one very knowledgeable group says aversion to equity will remain for a long time, say five to ten years which means the stock markets investments made by all of us can become practically worthless in the years to come.This will also suit the company promoters who in any case play a LT waiting game to grab shares at the lowest possible prices.
- other group says emerging markets will perform well in mid to late 2009 onwards.
None of us know what is going to happen. If Japan can see the Nikkei index go to 6500 now from 40000 in Dec 1989 , then where is the question of predicting anything?
4)Now for what is to be done :
All LT investors like me will simply stay put and add positions whenever money and valuations permit. There is no other option.
Ofcourse now very few LT investors have a lot of money to invest.
This is going to be a very rough road ahead and only the fittest will survive and make tons of money.
5) My personal take on the markets (need a little bit of explanation)
The total black money of indian politicians (mostly) and businessmen (to a smaller extent), in swiss banks is USD 1450 billion(believe it not, this is absolutely true)
Let us see the following example.
If in Dec 2007 a share was quoting Rs 1000 at exchange rate of Rs 39/USD and now it is quoting Rs 300 at exchange rate of Rs 49 /USD , what this means is that the very same share could have been sold in Dec 2007 with a realisation of USD 25 approximately and now can be bought back at USD 6. This means on an average , the so called FIIs (we all know who they are ) are getting a price discount of 75 % compared to last year ( this is the very minimum discount they are getting ).
So what will happen is in the next three to four years is that atleast USD 40 - 50 billion of black money ( through swiss - mauritius route) will flow back into Indian stock markets through the FII route and inflate the markets in a very big way again. Of this there is no doubt.
So we need to wait for the next three to four years to make big time money. There is no other way.
Also with the parliamentary elections approaching , the ruling party needs to get the rupee severely devalued against the USD to get more money for election expenses( when black money will be brought back for electioneering work). Thats why you find RBI going out of the way to get the rupee severly devalued in the last few months, to kill two birds with one stone for their political masters.This also means the Rupee will stay weak for about two years at the minimum or even three years.
What all of us need to understand is that very powerful and invisible hands act globally in a united way and defraud investors globally every eight to ten years in a big way. Since this cycle is played out over a long period of time , the strategy is visible only to a few original thinkers of the stock markets.
In the olden days you had kings & their commanders, invaders doing this looting periodically on commoners and now the difference this is done electronically without any physical pain.
Once we understand this cycle , we will all be better prepared in future.
