Are You As Confident As Our PM?
In this issue:
» Will the PM's confidence transpire into reality?
» Stocks across Asia crash on economic concerns
» If economy is down, can stocks go up?
» Buffett selling energy, buying healthcare stocks
» ...and more!!
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Total confidence, isn't it? These comments can be seen in light of Dr. Singh trying to allay fears emanating from the global economic meltdown, unending terrorism and the swine flu to assert that India had the strength and resilience to overcome all obstacles.
But what about the action? The last time we heard his ministers 'talk' about action was when they were spelling out their 100-day plan. Now even that has come a cropper! Of course, one cannot judge a government's abilities through a 100-day plan, but can any politician in power explain our blemished history in meeting targets set for a period as long as 5 years! Or at least, how do we know who's accountable for the failures of the past in meeting the 'confident' targets that were set at the start of all the 5-year plans?
Now the Prime Minister and his team-members are confident that the Indian economy will bounce back and 'witness a 9% growth' by this year end. We remain utterly skeptical. Apart from the fact that the global economy remains in tatters and that it has clear implications for India as well, we also have to contend with weak monsoon this year that is likely to cut short recovery in consumption demand from rural areas.
Has the Prime Minister's office taken this into account while preparing his Independence Day speech? Or are they still shooting in the dark assuming that Indians, who have been fooled 'confidently' in the past, can be fooled with equal confidence in the future as well?
01:33 | Chart of the day |
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Overall, stocks have gotten expensive in India after the sharp run up seen since March. While corporate profitability during the June quarter has surprised us on the positive side, we remain concerned about the sustainability of the same. While investors can still find valuable stocks for long term investment, such a universe is shrinking by the day. At these times therefore, you need to take every step with utmost caution.
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Interestingly, this sharp fall in Asian markets today comes just in the wake of economists' observations that the worst is over for the global economy given the rebound in US and European regions. And guess what? These rosy observations come at a time when the economies of the US and Europe continue to shed jobs on a mass scale and consumers, wary of splurging all over again, are saving more than they are spending.
Further, as these consumers go on a saving spree thereby leading to less demand for products that companies make, a lot many of the companies are going bankrupt. The proof - US bankruptcy filings rose 38% year on year (YoY) in April-June 2009 period, according to data released last weekend.
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Thus, opines Dr. Faber, "They're (central banks) dangerous to the health of the global economy". With many of their policies directly leading to the Nasdaq bubble and the housing bubble, it does not seem very farfetched to think that their policies hold the potential of directly creating yet another bubble.
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But the developed nations seem to be a different kettle of fish altogether with rapidly ageing populations and spiraling health care costs. Little wonder, Buffett has still kept the theme close to his heart as was evidenced in his piling up of shares in drug and consumer product behemoth J&J during the quarter gone by. Besides J&J, he also bought shares in another health care company. On the other hand, Buffett seems to have turned a little bearish on energy and power stocks as he lightened his position in Conoco Phillips and utility operator Constellation Energy. Thus, this stock maneuvering of his would have indeed caught the fancy of scores of money managers and investors alike.
04:57 | Today's investing mantra |
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5 Responses to "Are You As Confident As Our PM?"
B.KERALASSERY
Aug 18, 2009
OUR P.M. IS GREAT AND HE NEEDS THE SUPPORT AND
CO-OPERATION OF ALL TO CONVERT TALK INTO ACTION
Chandra
Aug 17, 2009I thought Buffett bought Conoco Phillips less than a year ago. If that is true, then I wonder the long term strategy that Buffett believes, has gone in this case.
ashok lele
Aug 17, 2009I am not at all confident as our respected Prime Minister is.Problems facing our nation today are much more severe in magnitude than they were in past.Having respect for great Economist (Dr.Manmohan Singh) if you take cognisance of day today contradictory statements by various honourable ministers they provide you laughing jokes.According to me utmost priority is to be given to eliminate rampant corruption in all the fields . Improper planning will lead us to hell (eg. Thermal power stations - as on today coal supply is not sufficient & more thermal power station are innaugurated everywhere with wide publicity! for ministers .Population control is absolute necessity of the day which is grossly neglected at all levels.May that allmighty GOD save our beloved Nation -Bharat !
Girjaprasad Kantharia
Aug 19, 2009The Prime Minister has successfully completed his first five year term,
and he is now in his second term. Against all odds arising out of the
global meltdown, Dr.Manmohan Singh has steered the nation to a slow but steady path of development And so it is simple logic that he shall
continue to maintain this growth trajectory throughout his second term in office keeping in mind his experience of the first term.However, he shall need all the good wishes and backing of each and every countryman in this endeavour.