Red Alert for Global Stocks – TSUNAMI 7
Ref: 10-003 of 24 Jan, 2010 PDF Download from ScribD or Download Pool Sidebar>>Articles
Dear Readers,
The correction has started precisely on the date we mentioned – 21st January, 2010. We predicted it more than a month ago. Now, the situation has taken turn for the worse. The trigger was provided by President Obama’s proposed clamp down on the banks proposing far reaching regulatory actions to rein in the banks in terms of their size and activities. A separate article will appear within a few days titled – OBAMA WAR with INTERNAL TERRORISTS
Dow has lost over 5% in 3 days. S&P has dropped to 1093, slightly above critical level of 1083. I do not care for technical indicators. My forte is fundamentals. The core fundamentals are worsening.
- Bernanke’s extension as Fed chief, once considered almost a done deal, is now in serious doubt. If he is reconfirmed, there may be a short reprieve for the market.
- The future of Treasury Secretary Timothy Geithner is also in doubt. The AIG dossier is becoming murky. The testimony of Paulson with Geithner in relation to AIG affairs is due on Wednesday, 27th January, 2010. It means that the Senators know something ignominious more than the investors are aware of.
- There are indications that the Senators have finally realized the extent of damage done by Henry Paulson of Goldman Sachs and Ben Bernanke from Fed.
- President Obama’s pathani demand “We want our money back” alludes that the $306 billions non fund based guarantee given for Citigroup’s worthless debt at behest of Paulson – Bernanke combine are maturing into real fund based liabilities.
- Read with massive profit of Goldman Sachs, and Citigroup’s insistence to cancel out the “loss sharing agreement with the Fed/Treasury”, the Senators and the President Obama appear to have realized the “foul play” and “Criminal conspiracy” against the State. Many frauds may come to light. It could have massive effect on Wall Street. Even Warren Buffet could become controversial. His days are beginning to have “U” turn for long.
- Two days – Saturday and Sunday, have passed since the President Obama disclosed his plan to rein in the banks, their size and their disapproved activities. The era of $25 billions of profit for the bank is gone for ever.
- The earnings of almost all banks will be downgraded by the Analysts up to 30% to 80% that could collapse the prices of major money center banks. The entire banking structure globally will be re-assessed on severe downside. Bank of America, JP Morgan Chase, and Wells Fargo could face the burn of third degree.
- There will be further lending squeeze from these banks raising real market interest rates.
- If these banks can not make double digit billions of dollars of profit for next 5 years, , they will never be able to recover the past losses. Nor will they be able to raise new capital due to poor earning prospects. Fed/Treasury window will be shut for good.
- In short, some major banks could become officially insolvent.
- Goldman Sachs and Morgan Stanley may surrender banking license to avoid above restrictions.
- The global banking giants operating in US such as Barclays, Deutsche Bank, UBS and Credit Suisse may have to realign their business. UK and Europe too could adopt similar measures with similar effects. UK and Europe always play monkey game.
- SEC is preparing for some tough times ahead. Bloomberg reports on 23/Jan that “Concern that short-sellers accelerate stock declines may prompt the Securities and Exchange Commission to adopt a rule next month aimed at curbing bearish bets when equities are plunging.” It adds that “The regulation would require the trades be executed above the best existing bid in the market when shares fall 10 percent in a day,” In short, alarm is on.
Massive collapse is about to set in from Monday onwards. It is scary. It was inevitable; we were merely waiting for the trigger. President Obama provided it. He is not to blame for what he proposes. It is the way he has presented them and timing thereof. He is under extreme pressure to perform that is telling on him for his expediency.
- The markets may lose anywhere from 5% to 15% in short time (< 1 month), and 15% to 50% in medium term (< 4 months) if the short term correction takes place.
- Margin calls will exacerbate the downside.
- Mutual Fund redemptions could cause massive slides.
- Money could become scarce overnight. Overnight Call rates could zoom and stay there for unduly long time forcing short term rates to rise. My previous article “Maturity Mismatch’ may become reality as projected.
- Monday could be the beginning of Tsunami wave, category 7. So many things could happen swiftly in short time.
- Massive losses to investors will become a hard reality. What they lose this time may not be recoverable in next 3 to 7 years.
- The only reprieve will come when the Bernanke is allowed to continue his job. While he has lost all credibility and should not be confirmed, it is in the interest of the market that he continues for a while (temporary extension) until his successor is chosen. If he loses the job, one may be waiting for him at Goldman Sachs.
This time, protecting capital is more important than the earnings. If you have capital left, there would be earnings one day. It is not necessary to make money in every trade every day. It is enough if you made good money some time rather than a little money every time. We therefore suggest the following from Monday onwards.
There could be huge meltdown. All markets may go down Minimum 3 to 7 days continuously in varying degree.
US Market:
- Dow may lose another 14% (1400 to 1500 points) and then rest before going down again.
- If S&P goes below 1083, it will be bad sign for technical analysts. In my view that it will be breached.
- NASDAQ may outperform DOW.
- Buy Put options on S&P 100 known as OEX-100 and Nikkei 225. These are very volatile.
- Do not trade S&P 500, it is less liquid and does not move fast.
- SELL short or Buy puts on ADRs of Wipro (trading at 43% premium) and ICICI Bank (-3%) and HDFC Bank (+15% premium). The heavy premium is usually lost in meltdown. Further, one can keep short position in US market on any equity or ADRs for about 12 months by paying suitable margin. Check with your US broker first.
- Think of accumulating undervalued stocks like MTNL with Zero debt where discount will rise due to meltdown making it attractive. Stronger rupee tend to add more value in $ terms.
- Indian ADRs could develop more discount than shown today, making them more attractive. Some counters are better bought as ADRs than underlying equities in India. If you have choice between domestic share and ADR, prefer ADR of liquid counters. (large cap stocks)
- A strong buy opportunity may emerge in FCCB (Foreign Currency Convertible Bonds) of Indian companies that may be hammered in meltdown. Their yields may rise, premium contracts or even trade at discount. They being denominated in $, stronger rupee will give better return than underlying shares in India. Watch out for them. Go only for well known battered counters in info tech, pharmaceuticals and telecom sector. This is for only wealthy investors having $ 1 Million or more investment budget. Not suitable for local investors due to larger size lot involved
10. There could be political and social upheavals. Since hundreds of billions of dollars are at stake, and jobs being lost with increasing intensity, violent political removal at high level at many places is likely. This time for a change, the war will be within United States. Law may take a back seat.
Indian Markets:
Indian growth story could be dented but will remain intact than China. India is still safest place to invest. With US, Europe, UK, Japan and even China taking massive blow, India, Indian economy and even Indian Rupee (if made convertible) could become real alternative to US dollar.
Nevertheless, holed in the habit of taking cue from the Dow and Asian markets, SENSEX may tumble by 14% in a few days (2400 points). Huge margin calls from Wednesday onward could push it down further by another 1000 points. The market may reach 13,400 first, rebound for 800 pts in dead cat bounce rally, followed by sharp drop down further by 2000 points. In short, the market may lose 4600 points within one month. Even if the market recovers during intraday, it may close down near the close. Not many would want to keep their position open overnight.
However, there is a caveat. Indian budget due in February could provide relief or act as mild buffer against further sharp fall. It all depends how Government of India responds. The interest rates may be lowered, not raised to contain inflation, and Income Taxes could be lowered for Corporate and Individuals that may provide fillip to the Indian markets. This is however conjectural. Rely more on facts than rumors or opinion. Financial expediency will prevail over political one.
- Stock financing banks like ICICI, HDFC, Axis Bank, SBI could tumble more due to proposed changes in banking law in United States. They will not be able to carry out their investment banking activities as before. They could be the index draggers. Do not touch them for another 1 month even with remote pole. Swap them into neutral stocks like IDBI Bank or IFCI who are domestic oriented.
- Stay on short side.
- If you do not want to sell down your portfolio, insure it by buying Out of Money Put option of NIFTY for February or March, if available. Do not speculate, use it as hedge. The markets could have wild swings that could boost or bust the speculators.
- SELL 50% of remaining stocks held. You may have already sold 70% by now from the peak, if you have followed this column. What you may have is remaining 20% exposure.
- Possible exceptions are recovery play like Spice Jet. Ispat Industries and Dish TV who have returned to profits already or will return in one quarter.
- Finish your selling through out the day, taking advantage of intraday recovery. Even if the Asian markets recover during the day, continue selling. You may sell some Spice jet too if you are sitting on good profit, with a view to buying back later.
- Stocks like ITC and Hindustan Lever may perform better than others.
- SELL or reduce Mutual Funds (except LIC linked) by 70% and retain cash.
- Focus on buying only after 3 days of fall only the following stocks. (1) Spice jet (<56) (2) Ispat Industries (<23), (3) Dish TV (<41) , (4) Petronet (<71), and (5) Evinex (<3.65), (6) IOC (<270), (7)IFCI (<43), (8) UCOBank (<48), (9) LIC Housing Finance
- Avoid Oils, Metals, Ores, Infrastructures and all other high PE stocks. Also avoid story stocks like PSU on privatization list.
- Avoid oil producers; prefer State Owned Refineries like IOC, HPCL, BPCL, MRPL etc. Avoid private refiners like Essar Oil and Reliance.
- Buy more of Gold, Gold ETF and Silver.
- Some may say that if Gold falls below $1065, there could be a meltdown. Do not buy those stories. Gold rise most in uncertainty.
- Silver is generally stronger than Gold nowadays. Use major fall in their prices as strong buy opportunity.
- No targets are given because you will be in hit and run market for several days.
- Please note that this article is meant for regular delivery based investors. Some hedging operations are mentioned to protect their portfolio.
- Short term investors active in F&O segment may conduct their activities on their own impulse. This article is not meant for them.
- When the markets correct as above, it will provide strong platform to build Long Term Portfolio of any amount as suitable to investors. Investments made in steep correction time will provide better return than properties.
- Defer buying property for investment purpose until March 2010.
- If you are keen on investing into property for investment purpose, not for self use, better look out for commercial properties from March/April. Read my all articles on “How to invest series….” again.
10. Buy equities only when you strongly feel like selling gold or silver. At that time, one may buy equity or properties. Prefer “Ready to Possess” properties than properties under constructions from unknown developers who might close their shops suddenly and run away. This time around, avoid farm properties, and prefer commercial or residential properties in major metro cities or towns having population over 30 lakhs (3 Millions; +/- 20%)
Will the markets go the way as projected? I will be happy if I am proved wrong. The trouble is that I am often proved right than wrong. But do not take me for granted. Try to be rational and make your own calculated guess and decision. There is not going to be time for analysis.
A question may arise, whether this crisis was solvable? The answer is yes. For every problem there are multiple solutions. My father taught me once “For every problem, there are 10 solutions – just go out and find it”. I therefore wrote the book “SUB PRIME RESOLVED” which provided comprehensive solutions. If US-A does not go the way I have suggested, the nation is set for gloom, doom and total collapse. It may not exist in present political form.
I also made several attempts to offer solutions to the US Administration as under. However, there was no response. No regrets. I did my job and would let them do theirs.
First, when I offered solutions to President Bush in August 2008 before crisis began. However, he or his stooges in White House ignored. My letter to President Bush is already in the repository and read by the readers. The real trouble started precisely three weeks later in September 2008.
Second, I offered similar solutions to Senator Obama while he was campaigning for Presidency. There was no response. But I can understand that.
Third, when my book “SUB PRIME RESOLVED” was published in June 2009. I wrote to President Obama, the First Lady Michelle Obama and Vice President Joe Biden. No response either.
Fourth, when I wrote similar letter to ex-President Bill Clinton and Jimmy Carter; they too did not care to respond.
Fifth, when I sent my book “SUB PRIME RESOLVED” to Sen. McCain, and Bobby Jindal, Governor of Louisiana and Chris Dodd, Chairman of Senate Banking Committee. However I did not receive any reply or courtesy acknowledgement.
Sixth, when I wrote a letter to the President Obama very recently with similar letter copied to Vice President Joe Biden, Senator Christopher Dodd, Chairman of Senate Banking Committee, and Timothy Geithner, the incumbent Treasury Secretary. Again there was no reply or acknowledgement.
I threw a challenge to President Obama that if my solutions could not extract the United States from the severest financial crisis and make it healthy again within 9 months, I repeat 9 months, he can sign “Death Warrant” against me with my and my family’s full written consent.
Seventh, when I wrote to the Chair of FDIC (Federal Deposit Insurance Corporation). Again there was no reply or acknowledgement.
I wonder why we send our children to USA for higher education such as MBA when those expensive institutions do not even teach basics of Courtesy, Management and Administration to upcoming business and political leaders in United States itself. They keep their minds closed and ask us to keep ours open.
The Americans are suffering from “Superiority Complex”. The past successes have gone to their head. They appear to feel that only they know everything, forgetting that the knowledge knows no bounds. It can spread anywhere. We are in internet age, America’s own invention.
The White House may be thinking that this Kalidas, Anil Selarka or whoever he is, must be a crazy, egoistic, pseudo bastard. When our Nobel Laureate economists, financial gurus and management experts in United States are not able to think of one solution, how on earth this Kalidas could have multiple solutions from Hong Kong 5000 miles away? Throw him into the dustbin for good.
There is one way Americans can come out of troubles learning from Americans only if they prefer. Hand over the country to IBM executives. They know how to think, conceive, design, plan, implement, execute and bring positive result. They think out of the blue box. It was IBM who invented “Personal Computer”. Many years ago, the company was in shamble spending billions of dollars in advertisements.
However, they read the writing on the wall in time and did not take long to “dump” it by shifting to services and software solutions. There used to be IBM logo everywhere in the past. The striped blue logo is rarely seen anywhere now; and yet, they are everywhere like God. Look at them today – they are fast, nimble, profitable and as efficient as any coveted American enterprise ought to be.
President Obama has to take three decisions.
- Dump GDP theory. (the way IBM dumped and got out of PC business)
- Dump Goldman Sachs and quarantine every Goldman emission in Fed and Treasury (and everything should be fine in US and globally)
- Pump Gold. (bringing back monetary stability by re-standardizing dollar)
Kalidas (Anil Selarka) Ref: 10-003 of 24 January, 2010 (Sunday)
Hong Kong
Personal Blog: http://anilselarka.com
Book Web : http://www.subprimeresolved.com
Disclaimer:
Readers, before you proceed:
This article is released on Sunday so that you have enough time to deliberate on information available from various sources. This is for your informational purpose only. Consult your professional broker, banker or investment adviser before acting or taking any decision. No liability of any kind attaches to the author.
Link to this page
Dear Anil,
It will be an excellent venture to start a web based education on markets.
RAJESH AGRAWAL
SINGAPORE
8th February 2010
Kalidas Says ….Tuesday, February 09, 2010
I am considering that.
RAJESH AGRAWAL
8 Feb 10 at 11:52 PM
Thanks for the article. After reading it, I feel that US is a single manipulator here using media, numbers, news the way they want. However, what about the whole other economies? Do they like watching this silently?
Or is it an internationally managed scam?
Kalidas Says ….Saturday, February 06, 2010
Reminder: Please append City and Country name to your signature invariably.
Reply: Who will bell the cat?
Rajsoman
6 Feb 10 at 1:38 AM
Sir,
Yet another good article, which can be easily read and understood. Secondly, the improved layout and design of the blog is very good and less strainful to the eyes.
VC Sekar, Delhi, India
05/02/2010
tks
VC Sekar
5 Feb 10 at 7:58 PM
Sir:
ICompletely agree that we should not try speculate and better follow the markets…
The reason i posted my query is because you said in one of your replies as quoted
Quote“Next week may be broad indicator. If no major damage is seen before 9th February, people may raise the equity level from 10% at present (per my suggestion) to 25% because other investment avenue is not yielding enough.”Quote
I thought it better to ask and have a clear view in brief than blindly following – no worries sir;
Sorry if i have offended your rules, Thank you very much for your time and knowledge;
Regards,
Jasmeer,
Toronto, Canada- Feb 3rd 2010
Jasmeer
4 Feb 10 at 12:47 AM
Hello Sir:
Did not get reply earlier so reposting.. maybe in wrong forum earlier..
In one of your replies to Raj on 31st Jan 2010, you mentioned as below:
Quote “Next week may be broad indicator. If no major damage is seen before 9th February, people may raise the equity level from 10% at present (per my suggestion) to 25% because other investment avenue is not yielding enough.”
UnQuote:
Sir, Can you please explain this in more detail sir.. What you meant?
Is it that if no major crash or correction happens/ starts by 9th Feb. we should all again start buying the Stocks? or
Do you think some corrective measures are being done by US Admin that will stop the correction to happen;
Please takeout some time at your convenience and put this in some details so that people who cashed dont panic and poke you with questions every 10-20points raise in DOW or NIFTY;
Thanks a Ton for your great work and sharing of knowledge which we cant find in any books for sure.
Would be really grateful. Thanks
Jasmeer, Toronto, Canada- Feb 3rd 2010
Kalidas Says ….Wednesday, February 03, 2010
This column is meant for information, not speculating various scenario for which it would need 10 pages, not 10 lines. I can not dwell into too much details here.
Jasmeer
3 Feb 10 at 9:57 PM
Dear Anil,
Thank you for answering my queries.
Yes I agree by buying STC India now I got into the train a little late. I have long term interest in the stock and my holding period is 2 years. Can you advise on the target I can expect (considering both possibilities, privatization and no privatization?
Also you mentioned that budget can add about 500 points. Is there a possibility that India comes out with a favorable budget which takes the market higher or it will there just be a knee jerk (positive) reaction and the markets will continue to fall after a few days to 12k as predicted by you?
Anil I am very new to markets so kindly excuse if my questions are too obvious.
Regards,
Niranjan, Doha, Qatar
Kalidas Says ….Tuesday, February 02, 2010
Although India is good, the stocks like STC India, PSU, depend on government policy. I never speculate on policy about companies subject to socio-objectives like Oils, Sugar, fedible oils, food grains price control.
When the world market melts, everything melts including India.. But India is well placed for quick rebound due to its fundamentals. When the fire is burning at 100 degrees or more from below, the water (stocks) in the pot right above are bound to evaporate. It happened before and it will happen again.
I therefore stay with solid stocks with growing earning base. If stocks like Spicejet, UCO bank could be available at 3 to 5 times P/E on 2 years basis, or very large companies in oil marketing like IOC, BPCL or HPCL (trading at 4 to 6 times PE) or even the stocks like morgage financier LIC Housing Finance, I do not go for short term expensive stocks like STC at 35 to 40 times PE for very short term objective where risk of downside is relatively more. The companies like STC do not have profit motive. And the stock market is profit driven. If government policy changes to decontrol the oil prices in phased manner, then the above SOE refiners could rise 4 to 5 times. Such measures are not expected or speculated for STC. These stocks of PSU are rising on the premise that “Behti ganga me haath dho lo”
Forget my predictions or fears of market hitting 12000. I have no idea what policy decision will be for the government with regard to PSU -there is lot of politics too. Further, I never followed your stock. Please make your own judgment reading from sources who are experts in such PSU sector – I am not.
Further, my opinion is an opinion. Treat it that way.
Niranjan
2 Feb 10 at 3:59 AM
Dear Kalidasji,
With respect to Indian stocks, your opinion that you see stock prices continue sliding downwards or consolidating and moving upwards hereafter. Also more specifically your thoughts on Nifty movement.
With Regards
Rajesh
Chennai
India
rajesh
1 Feb 10 at 9:52 PM
Hi Kalidas ji,
If FED/central governments keep Interest Rate zero or near about zero, What would be impact on Fixed Income Rate Derivatives (OTC contract).
Thanks,
Ashok, Mumbai India – 01/Feb/10 18:36
Kalidas Says ….Monday, February 01, 2010
Same effect as you are seeing today – Financial crisis to continue
Ashok
1 Feb 10 at 9:10 PM
dear anilji,
i have 100 shares of state bank of bikaner & jaipur. purchase prece is 240. with the hope that bank will merged with sbi i have purchased the share. what shoul i do. hold or qute?
kishorkant bhatt
mumbai, india
Kalidas Says ….Monday, February 01, 2010
Write your post properly. Can not you capitalize the words and other initials? It is a headache for me to answer such posts.
Answer is: Hold it. you will get a better deal when they merge. SBBj P/E is just 5 times, whereas SBI is 12 times. When they merge, you will get more shares of SBI, that is, instead of getting 20% share, you might get 40% or more. you will have more gain in holding it
This post is MARKED FOR DELETION for not adhering to norm. It will be deleted on 5/2
kishorkant shantilal bhatt
1 Feb 10 at 12:47 PM
Dear Mr. Kalidasji,
Many thanks for your reply. So you agree that Warren Buffet has managed to pull it off for the time being. This is in response to your article where you good sir had written off the venture to be loss making.
Well you good sir once again state that Warren buffet – the worls greatest investor in stocks last 40 years — will meet his his waterloo.
This time you say it will be coz of his index puts he will fail, kindly do let us know when we will know ( the time frame )whether this venture of his will be a dud or profitable ?
Once again thanks for your kind reply
Regards
Rajesh,
Chennai
India
Kalidas Says ….Monday, February 01, 2010
You are mistaken. I thought that you were referrinng to Buffet’s investment in Goldman and GE. I did not include his latest venture. Further, the readers are interested in knowing more about Indian stocks, not what Mr. Buffet does or doesn’t
rajesh
31 Jan 10 at 11:05 PM
dear kalidas ji,
once again i ask you — your thoughts on your article of warren buffet turning money lender from investor . did he pull it off ?
regards
rajesh
chennai
Kalidas Says ….Sunday, January 31, 2010 at 1:07 PM HKST
Time being yes, but he has written (sold) billions of dollars of Index puts, much beyond his net worth, in European market. He will become Napoleon meeting his waterloo. These are his last bright days
rajesh
31 Jan 10 at 11:33 AM
Dear Anil,
I recently started following your blog, one thing that amazed me is that level of clarity and confidence exhibited in your writing. I really appreciate that. There are hardly any market experts who have the guts to call spade a spade.
I have 2 queries,
1. You mentioned the coming budget in Feb could provide cushion to the markets. To what levels the markets can rise before continuing its downward journey?
2. You mentioned to stay away from the PSU stocks lined for privatization. I am holding STC India @520 and CMP is 514. Please advice on whether I can hold it till the budget or should I exit immediately.
Looking forward to hearing from you.
Regards,
Niranjan
Doha, Qatar
Kalidas Says ….Sunday, January 31, 2010 at 12:37 PM HKST
Indian budget is now open exercise, not secretive as it used to be. Only negative surprises will spook the market. There may be some good taxation proposal that could benefit Individuals and Corporate sector. Add about 500 points for budget related boost. One must sell 3 days before budget is actually out
There may be a few proposal to dilute Government stake in some companies like IFCI, TFCI, IDBI, AIR INDIA, Indian Airlines. Some nationalized banks may be grouped under merger (a nasty proposal. The combined bank’s stake will fetch less revenue. They should sell some banks outright upto 51% NOW, then only the buyers will emerge and pay above average price).
For companies like STC may not be privatized or stake sold because it is a vital link for government to import sensitive commodities in severe price squeeze such as Sugar now. Nevertheless, the next 15 days may be good for some PSU entities, even if they have run up massively recently. The sector or concept strength may boost STC also.
This stock is trading at very high level already (40 times PE). Almost all PSU stocks have been pumped up by some brokers to incredible level. The stock is up 80% in last 3 months. But you never know in this kind of stocks – the logic does not apply here. Looks like you got into running train only other day. Possibility of gain is 20%, loss 20%. Take your pick
Niranjan
31 Jan 10 at 5:07 AM
Sir, amazing stuff from you. You have hit the bull’s eye dot on time.
Great modesty in stating the below:
“Will the markets go the way as projected? I will be happy if I am proved wrong. The trouble is that I am often proved right than wrong.”
But, in my opinion the markets won’t go that much low(4600 points lose in 1 month –> sensex at 13400). You will be proved happy this time.
Let’s wait n watch. Big pranams for your prophetic skills which requires great brains. Happy to see modern day Kalidas’s writings. May His blessings be with you – Always.
Regards,
GSRao,
NJ, USA
Kalidas Says ….Sunday, January 31, 2010 at 12:36 PM HKST
May be you are right. The budget related expectation may help India avoiding much damage.
GSRao
31 Jan 10 at 4:15 AM
ever visted http://www.generationaldynamics.com
any comments?
chennai
India
Kalidas Says ….Saturday, January 30, 2010 at 10:24 PM HKST
Marked for deletion for not appending signature as required
sadhic
30 Jan 10 at 2:04 PM
Dear Anilji,
What is your opinion of technical analysis of stock charts ? Is it useful to learn technical analysis ?
Kind Regards,
Girish Chauhan
Mumbai, INDIA
29-Jan-2010, 11:00 PM
Kalidas Says ….Saturday, January 30, 2010 at 9:27 AM HKST
Almost 99 traders and stock analysts use charts. We can not ignore them. The charts depend on history and the followers believe in theory that the history repeats itself. In normal market conditions they work better.
However, I do not use the charts. In fact, I never used charts. Since most people follow charts, I try to evaluate how others would react.
My approach is for future. I rely more on fundamentals. I do well in abnormal conditions. I get into “uncharted territory” most of the times. I am therefore in remaining 1%
Girish Chauhan
30 Jan 10 at 1:28 AM
Dear Anilji:
Do you think the confirmation of 2nd term to the Fed Chairman – Ben Bernank will make US and world markets rally for few more days or since 1083 on S & P is breached yesterday.. Fed news will not have any effect to move the markets up?
Can you put your views on the latest developments
Thanks
Sreeram, London UK
0930hrs 29th Jan 10
Kalidas Says ….Friday, January 29, 2010 at 10:39 PM HKST
It is market neutral event. It was expected. When Bernanke is in that seat for over 4 years by now, and things simply worsened, his renewal can only excerbate the dire situation. He will finish the job to destroy America. Expect the worse – that is my analysis.
Sreeram, UK
29 Jan 10 at 5:39 PM
Thanks a million sir. Your reply has probably saved my life.
Kuldeep singh, Bangalore, India.
Kuldeep singh
28 Jan 10 at 11:44 PM
Dear sir,
I have 8 lots nifty(feb series) long at 5146…….todays closing is 4867. Is there any hope… if no…then please suggest a shorting strategy. I do not understand options. A reply will be highly appreciated.
Your biggest admirer and Fan,
Kuldeep Singh, Bangalore.
Kalidas Says ….Thursday, January 28, 2010 at 10:58 PM HKST
Write the name of country also in your signature, otherwise do not expect any reply. Adhere to our norms or do not bother to post any query.
It is my established policy not to advise on F&O segment. This is too tricky. One general advice – if you play futures, you have to play against the hopes, that is, you short it in rally, do not buy.
If you are buying long in February, you have to be short on January, which acts as hedge. Normally, hedge positions are 20% of other position. That is if you are long 8 contracts for February, you go short 2 contracts at least for January so that you can play both sides. If the market goes down, you make money on short side which you can buy back. and if the market goes higher, you make more on long side. The market always fluctuates.
Most people play with the hopes not against. If some one says,that the market will go to 21000 or NIFTY to 6000 they get trapped by buying such stories. they do not know that overseas market plays 60% role in deciding which way the local market will go.
DO NOT TAKE this for your trading strategy. Trust the strategy that works best for you. Leave your dreams of making a killing from stock markets by playing futures. you will destroy yourself.
Kuldeep singh
28 Jan 10 at 9:31 PM
Dear Sir,
my earlier question seems to be deleted. i would like your views on your earlier article on warren buffet turning money lender from investor ! has he been able to pull it off ?
Regards
Kalidas Says ….Thursday, January 28, 2010 at 5:46 AM HKST
It was deleted, and this will be also. You do not have discipline and do not observe the norms. Read the section letter at the top and note to append your signature at the end of message, clearly mentioning name, city and country. Do not waste my time if you do not want to observe basic norms and protocol.
Also Spell check your message and capitalize the words properly before you post. In 15 months of this blog’s existence, I deleted first post, that is of yours after lots of warnings to the readers.
rajesh
28 Jan 10 at 2:58 AM
Dear Sir,
After having remained as a silent observer of the market today I took the call to sell and diluted my portfolio.
Though there are many questions reeling in my head, I will limit them to few:
1. what was the single most reason that made you give the date of Jan 21 for Sell call!!. In fact you changed it from Jan 15 to Jan 21 and the crash started right on dot !!
2. what is the meaningful sensex level where most negative news would have dried out ? Or rather what kind of bottom would you expect for sensex?
3. I am in the process of re-aligning my portfolio after this sell off & these are the stocks that I am looking at with long term view.
LICHF , SPICEJET, UCOBANK, PETRONET,GSPL
EDUCOMP, PRISM CEMENT, MRPL,NHPC, IDFC.
Pls express your views on these – which ones do you think will be good options (other than of course, LICHF,SpiceJet,Petronet,Uco which you have been suggesting all along).
Whether it be Bull market or bear market , there’s always something that I get to learn from you. Thanks for all that.
regards
Raghav
Mumbai,India
Kalidas Says ….Thursday, January 28, 2010 at 5:16 AM HKST
(1) Intuition, Luck or deep set knowledge – I do not know; I read a lot, try to interpret event in my mind that give me perhaps a sense of intuition.
(2) 14,200 is the first stop; 11,800 is second and perhaps last, unless there is precipitate collapse in the United States. The best days of Sensex are over. Instead of predicting Sensex, focus on meritorious stocks that could make money.
(3) I do not know about EDUCOMP, PRISM CEMENT, NHPC, IDFC. I am not so good at high tech stocks. I like old generation stocks which are easy to understand.
Finally, bull market or bear market, there are always opportunities to make money. Just focus.
Raghav
28 Jan 10 at 12:10 AM
Dear Anilji:
Thanks for responding on my 3queries, i am in touch with Royal Bank of Canada DS (RBC) will get back to you once i am ready with an account, i am also trying with Standard Bank (SB); Though i have HSBC account, none of their staff understands or know about Zero Coupon Bonds (ZCB) even after speaking to some of their advisors; So i will try to get an account opened in RBC or SB; What should be the minimum amount i should have in hand to start buying ZBC’s when time comes so that i can arrange the money;
Today Wall Street in US-A is waiting for the FOMC Data and Obama’s speech, will we see further blood bath in all world indicies from tomorrow or are you expecting any dead cat bounce from here? Your views on this please
Many Thanks again for saving us SPOT on from this already 500points crash on NIFTY
Regards,
Sreeram, London UK
1335hrs – 27th Jan 10
Sreeram, UK
27 Jan 10 at 9:36 PM
Dear Kalidasji,
Turning your attention to your statement :- “This time around, avoid farm properties”.
Any specific reason for this directive? I am trying to see if I can get one for long time, and if I have something in a right range of less than 2L/Acre, the,n I am going to grab the opportunity.
Anything wrong with my plan at this time?
Dongre, Mumbai, India, Tue Jan 26 23:07 IST 2010
Kalidas Says ….Wednesday, January 27, 2010 at 12:16 PM HKST
Nothing wrong with your intention. During severe stock market correction, there may be abrupt selling in City properties. You will get more bargain there. They also move up quickly when the concern subsides. You can then sell easily in rising market later.
A farmer does not invest into stock market. He will not be under pressure to cause distress sale. When there is draught, there will be more bargains. Further, right now the soft commodity prices are high, so land is more valuable to a farmer, he will not sell that easily.
Every investor should buy at least 1 to 2 acres of land, agriculture land, in his native place where he can manage. Once his name is shown on 7/12 (agriculture property title document), and written as farmer, he can afford to buy more land later.
Dongre
27 Jan 10 at 1:39 AM
Dear Anilbhai,
In reference with today’s developments on the debt rating of Japan and further tightening by China by hiking the CRR, are these considered as significant milestones on the way to the upcoming crash?
Regards,
The Monk, Singapore.
Kalidas Says ….Tuesday, January 26, 2010 at 8:51 PM HKST
This appears to be in response to Japan’s discomfiture to buy further US treasury. When US can not persuade the big lenders like Japan and China to buy its dollar, they use rating agencies for downgrade as if these giant creditors of the world, China and Japan, who have between them given $ 1.6 trillions by way of treasury purchase, are being threatened with downgrades and allusion that there is something wrong with them. Hoo could Japan and China could lose their rating when the bankrupt USA is able to maintain same AAA rating?
In any case, I did not consider these aspects while issuing Red Alert. Downgrading Japan and forcing Interest rates higher, will be extremely good for Japanese economy. You have read my book. Where I have mentioned that ” Raise the Rates, Lower the Taxes” is the solution. Higher rates will unwind carry trade, help Japanese savers to earn something and then spend. It will bring back growth to Japan after 16 years. Japanese Yen will climb to 79~81 whatever Japanese could attempt to do to restrict the rise. Their anti-growth, anti-Yen policy will come to an end. Higher rates will strengthen the yen, bring down the inflation (that reduce the cost), and put the money (interest) in the pocket of the savers to help them spend to revive the growth.
Look at India – higher rate of 7% does not hurt its growth. The consumers are spending more because they earn interest on bank deposits.
There is no change in the course of action. Higher rates or downgrades will strengthen the yen, the Nikkei could fall, the put option on Nikkei will make more money as mentioned in the article.
The Monk
26 Jan 10 at 5:02 PM
Dear Kalidas sir,
You have so much knowledge on stock market and investments. Please write a book on how to select multi bagger stocks. It will be of great help for dummies like us..
Best Regards,
Chandramohan, Bangalore, India
Kalidas Says ….Tuesday, January 26, 2010 at 2:32 PM HKST
There are hundreds of books out there. I do not want to compete in such crowded market place. I may start web education instead where I can teach online. I am just evaluating that possibility.
Chandramohan
26 Jan 10 at 3:39 AM
Dear Anil,
One of the regular readers of your blog.
Can you please put some light on ADR ? I read through it from Wikiepedia, just a one line for other readers “An American Depositary Receipt (or ADR) represents ownership in the shares of a non-U.S. company and trades in U.S. financial markets.”
I have a trading a/c “Scottrade”, is ADR like buying any other equity ?, where you can buy and sell at your will or is it treated differently ?
This is my plan of investment for coming months, Would appreciate if you can please let me know if it needs any adjustment:
1) I plan to invest in FNM and FRE (ratio of 1:1) in Monthly investment style, like investing $1000 or less monthly .
2) If I understand ADR’s then investing it in accordinly.
3) Add more to my gold or silver investment (Already have 100gm @ $1170/-)
The above investment is over and above my investments in Indian equity.
Thanks in advance
Nitin
Washington, DC - USA
Kalidas Says ….Tuesday, January 26, 2010 at 2:20 PM HKST
Yes, an ADR trades like equity shares. However, please note that “One ADR may be = 1 or more domestic shares”. You have to find out whether ADR is trading at premium or discount. Try t buy ADRs at discount, not one that is at huge premium like WIPRO. visit Kalidas Says ….Tuesday, January 26, 2010 at 2:20 PM HKST Yes, an ADR trades like equity shares. However, please note that “One ADR may be = 1 or more domestic shares”. You have to find out whether ADR is trading at premium or discount. Try t buy ADRs at discount, not one that is at huge premium like WIPRO. visit Equitymaster website and check their table of Indian ADRs”>Equitymaster website and check their table of Indian ADRs Read all material on ADRs. Visit some Barnes and Noble bookstore and read it there. Or visit ScribD website and search for ADR as term.
Avoid Fannie Mae and Freddie Mae for few more days due to latest developments – Sen Barney Frank disclosed House plan to dissolve these institition and create a new one. Yes, you may take some position (with clear understanding that there could be heavy loss), but not by using monthly imprest system. It is an excellent idea but the focus is not so clear. I would not wager more than 2% of investment budget. I would enlarge when I am sure that these institutions would survive for another 3 years at least.
Buy another 50 gms of gold below 1085 or even now <1100.
Nitin
26 Jan 10 at 2:10 AM
Dear Sir
Thanks for alerting us in advance.
However, the reason clearly remains unspelt as to why the fall will take place from monday only ??
Regards
Alankrit – Mumbai- India
Alankrit
25 Jan 10 at 5:23 PM
Thanks a lot for the red alert to Save our capital!! Anology of IBM , perhaps the best lateral thinking example in this context. Yes sir it is the story not much discussed as the success was due to Indian operations.( Hurts American Ego!!!). I remember it had around 5K Staff in Indian operation during 2003 which has crossed 100K now. As its CEO puts it “ one should not be surprised if Futuer IBM CEO is from India”.
Shiva
Bangalore
India
shiva
25 Jan 10 at 6:26 AM
Thanks for the Heads-Up !!!!Dongre, Mumbai, India, Sun Jan 24 23:36 IST 2010
Dongre
25 Jan 10 at 2:09 AM
Dear Anilji..
Thank you for the ALERT at right time;
Hope the USA administration listen to your solution in making this world a better place to live;
Sir, I have 3 questions:
1. With Nifty at 5000 level, what options will be Out Of Money? below 4500>4400>… I would like to buy Feb/March options.
2. You adviced again at right time to come out of my Base Metals stocks on TSX-LUN, I came out with 120% profit (after holding 18months), but asked me to HOLD my COAL stock TSX-SGQ which is about launch IPO on Hongkong stock exchange on 29th JAN, I am holding this since 3years.. but do you think the global scenario will be more BAD to this IPO on Hongkong stock exchange than GOOD? I know this company is very good and has huge potential having its mines on door steps of its biggest consumer – China, I have 2000 shares bought at 2.1 3yrs back now CPM 17.8x;
Please guide me on this;
3. Can you alert us when we should go and buy Zero Coupon Bonds? I will approach Charles Schwab London Office tomorrow any suggestions what exact account type I should join them.. pls guide us..
Last but not the least. Thank you for making us more educated and smart by not investing at these high levels and take more logical decisions/investments;
God Bless You sir.. Thank you tons!!
Sreeram, London , UK
24-Jan-2010, 1430hrs
Kalidas Says ….Monday, January 25, 2010 at 5:12 PM HKST
reply under each para
Sreeram
24 Jan 10 at 10:39 PM