After tulip and dotcom mania, here come 'Bitcoins'!
In this issue:
» Is gold no longer a safe haven?
» Why Indian banking needs an overhaul
» Equity bull markets imminently visible: Mobius
» PSU banks compete with private for retaining talent
» ...and more!
------------------------------------- It's Not Just About Picking The Right Stocks... -------------------------------------
Take a look at the pyramid alongside...
This simple structure holds the secret to investing success!
That's right! You could read a dozen books on how to pick the right stocks, and yet never really create solid wealth from your portfolio.
And most of the times, the reason has something to do with this pyramid.
So, what's this all about? Find out all about this simple yet powerful investment rule here...
----------------------------------------------------------------------------------------------------------------
00:00 | ![]() | |
As per Wikipedia, Bitcoin is a digital decentralized currency based on peer to peer internet protocol. Introduced by Satoshi Nakamoto in 2009, Bitcoin is different from normal fiat currencies. It is not underwritten by any central bank. Instead, the money supply is automated and given to servers or 'bitcoin miners' that add them to an archived transaction log. Today, Bitcoin is the most widely used alternative currency. It is accepted by merchants and services internationally. In fact, the monetary base of Bitcoins was over US$1 bn at the end of March 2013. This itself suggests one needs to look into it more seriously.
An article in Forbes offers some interesting facts about the tenacity of the currency that has no official backing. The value of Bitcoins fell from US$ 32 in June 2011 to US$ 2 in November 2011. Then the price started going up again, rising to US$ 7 in January 2012. Undeterred by this volatility, Bitcoin speculators were prepared to pour in millions to back the digital currency. As number of Bitcoin transactions rose from 1,000 per day to 50,000 per day over the past two years, the value of each currency rose to US$ 140! That makes it a rise of 2000% in 2 years. The mini bank run in Cyprus has made the digital currency even more endearing. So much so that experts are debating whether Bitcoins can be an alternative to fiat currencies and gold.
According to us, a currency that has zero collateral cannot stay far from corrupted interests. It is hard to predict when and how will the Bitcoin bubble end. But whether or not excessive money printing makes paper currencies worthless, speculating in such fads can be a recipe to disaster.
Do you think Bitcoins could be an alternative to paper currencies? Please share your comments or post them on our Facebook page / Google+ page
01:35 | Chart of the day | |
![]() |
Data source: World Bank |
02:05 | ![]() | |
Soros has certainly given an interesting point of view. But those who've been following his investment philosophy closely know how quickly he can change his view. And the long term history of the yellow metal as the ultimate safe haven does run contrary to Soros' beliefs. Thus, we won't be surprised if Soros changes his view on this one and comes to the realisation that gold is indeed a safe haven. Therefore, it makes immense sense to let it remain a small part of your portfolio.
02:35 | ![]() | |
As per an article in Livemint, the RBI has completed its first round of investigations. The findings, as per the financial journal, point at widespread irregularities and suspicious dealing by front-desk employees. For instance, high-value insurance policies and substantial quantum of gold are sold without abiding by the know-your-customer (KYC) norms.
But this is just one thing. There are far murkier transactions being carried out by cooperative banks. It has been found that cooperative banks have been exploiting the loopholes in the system to help customers evade tax. You may be aware that any transaction above Rs 50,000 requires tax reporting. The central bank has found instances where money was deposited in certain accounts through countless demand drafts within months. Surprisingly, these demand drafts were all between Rs 49,500 and Rs 49,900!
All this means that India's banking system needs a thorough scrutiny. There is a strong need to fix loopholes that are exploited to evade tax. Will India win its war against black money? It seems we still have a long way to go.
03:03 | ![]() | |
Of course, here again, the emerging markets look to be the more attractive. These markets have been growing at a faster pace than the developed world. And hence the potential to earn good returns from emerging markets including India is certainly higher. Mobius opines that people would initially be sluggish when it comes to shifting money into equities. But once the trend catches on, bull markets will be eminently visible. We are not sure about the possibility of bull runs taking place in the future. But we believe that there will always be the potential to earn healthy returns from equities provided you buy into the right companies at the right price.
03:22 | ![]() | |
However, the challenge of public banks is not just limited to fill vacancies thus created. As Reserve Bank of India plans to issue new licenses to private banks, there is a risk public banks might lose their employees to private banks. With huge segment of youth in want of job, filling posts might be easy for public banks. However, that will not compensate for the loss of talented and experienced people. Hence, public banks need to give enough scope of career growth to its employees to make sure they don't lose the talent to the private banks.
That said, with critical criteria like annual appraisal and experience used for promotions, the tweaking should not happen to an extent where the quality of service offered to the customers takes a backseat. Or the transparency in promotions gets compromised. After all these issues will have serious impact on the quality of growth in the banks' business. To conclude, while the need to bring in some flexibility is valid, steps should be taken to make sure it doesn't promote inefficiency.
03:50 | ![]() | |
In order to rectify this situation, the Finance Ministry, Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have come up with an initiative to activate the dormant corporate bond market. For the first time, India's top banks, insurance companies, pension funds, mutual funds and small investors will be allowed to trade in corporate bonds and government securities (G-Sec). This will be done under a dedicated debt segment to be launched by the stock exchanges shortly. Till now, retail investors were clueless about where to buy G-Sec. This facility will help to solve that problem. This is easily one of the biggest initiatives taken by Indian financial regulators to develop the bond market. We certainly hope for the timely implementation of this initiative. It will go a long way in deepening the bond market in the country.
04:30 | ![]() | |
04:50 | Today's investing mantra |
Editor's note: We are pleased to inform you that we have introduced a new section called 'What We're Reading'. Here, you can access some interesting articles across the web that we liked reading.
Today's Premium Edition.
Today being a Saturday, there is no Premium edition being published.
Recent Articles
- All Good Things Come to an End... April 8, 2020
- Why your favourite e-letter won't reach you every week day.
- A Safe Stock to Lockdown Now April 2, 2020
- The market crashc has made strong, established brands attractive. Here's a stock to make the most of this opportunity...
- One Stock that is All Charged Up for the Post Coronavirus Rebound April 1, 2020
- A stock with strong moat is currently trading near 5-year lows.
- Sorry Warren Buffett, I'm Following This Man Instead of You in 2020 March 30, 2020
- This man warned of an impending market correction while everyone else was celebrating the renewed optimism in early 2020...
Equitymaster requests your view! Post a comment on "After tulip and dotcom mania, here come 'Bitcoins'!". Click here!
2 Responses to "After tulip and dotcom mania, here come 'Bitcoins'!"
joseph oommen
Apr 8, 2013regarding activating bond market the real issue is why should a retail invester buy bonds in stock mkts all over the world when the mkt goes down the invester chooses to sell shares and buy bonds, in india the retail invester doesnot have such option even if iut becomes available in the future retail will not because of the risks involved unlike in west fixed deposit in bank has soveerign guarantee and the last time a bank was allowed toliquisdate was in 1959. so there is no need for any retail invester to buy bond the interest on FD with principal guarnatteed by govt is more than enough
Frederick
Apr 8, 2013According to us (is "us" EM or USA), a currency that has zero collateral cannot stay far from corrupted interests. It is hard to predict when and how will the Bitcoin bubble end. But whether or not excessive money printing makes paper currencies worthless, speculating in such fads can be a recipe to disaster. "then what about paper currencies" that gov. can just print @ their wimps & fancy.
Regards,
Frederick