Living in a make-believe world? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Living in a make-believe world?

Jun 22, 2009

After a dull close to last week, when they declined in a range of 4-5%, all Asian markets are up with moderate gains to kick off this new week. While commodity stocks continue to trade weak following decline in prices of copper and oil, most other sectors are trading amidst strength across Asia. This follows the International Monetary Fund's (IMF) forecast of a 'modest' improvement in the world economic growth climate. "Financial conditions have improved, confidence has recovered gradually and indicators of production and demand have firmed," said a senior representative from the IMF yesterday.This is interesting given that as recently as last week, another world financial body - the World Bank - had outlined that the global economy will contract even more sharply than expected in 2009 and would shrink by nearly 3%, which was higher than its estimate of 1.75% made just a couple of months back.

We wonder with the US economy still going downhill, and not respite in sight, how come IMF has upgraded its world economic outlook. Things are not really exciting out there in the world's largest economy, and also the world's largest debtor. The housing sector remains weak, unemployment continues to rise, the government continues on its borrowing binge, consumer demand remains in doldrums as people have started saving more, and companies are not doing well for all these reasons. In short, there're no real reasons to cheer.

While we might not want to sound like doomsayers for spoiling the investors' mood, the things happening around makes us wonder whether we are living in a make-believe world. See for instance the government's balance sheet in India, which is also in a mess. The deficit (government's expenditure minus its income) has risen to record proportions and given the euphoria surrounding a 'stable government', the public servants in Delhi are more vulnerable to making more of those mistakes that led to a galloping deficit in the first place.

Some media men are projecting this year's budget to be the 'biggest budget ever'. For what? For the size of our fiscal problems, or for the sheer count of those involved in the budget making exercise itself? Expectations are running high for the finance mister to spell out the 'reform package' and investors might turn euphoric or despondent going by what the minister actually delivers on July 6th.

For you dear reader, we can wish for sanity, caution and discipline in whatever investment decisions you take. The stock markets might be euphoric over the next few weeks, as they have been in fourteen of the past fifteen. But you need to stand still and weigh your stock investing options very carefully, and only after considering the environment around. And more importantly, the company's real worth.

Equitymaster requests your view! Post a comment on "Living in a make-believe world?". Click here!


More Views on News

Top 5 Recent IPO Developments You Should Know (Views On News)

May 12, 2021

So far in 2021, IPOs in India have raised nearly US$ 3 bn, the best start to the year since 2018.

How Did Mindtree Perform in Q4FY21? (Company Info)

Apr 20, 2021

Here's the rundown on the company's latest quarterly results.

5 Big IPOs to Look Forward to in 2021 (Views On News)

Jun 19, 2021

A peak into the hype around the IPOs of internet companies like Zomato and Paytm

HDFC Banking and Financial Services Fund: Emphasizes on the Growing Sector (Outside View)

Jun 18, 2021

PersonalFN analyses the features of HDFC Banking and Financial Services Fund and explains the potential this fund has to offer to its investors.

Can You Make More than 100 Times Your Investment? (Profit Hunter)

Jun 18, 2021

The open secret to multiplying your money in forever stocks.

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

My 'Unlock' Investments (Fast Profits Daily)

Jun 11, 2021

The best unlock investments you can make in the market.

How I Discovered a 400-Year-Old Open Secret to Extreme Wealth (Profit Hunter)

Jun 11, 2021

Charlie Munger's open secret about investing success.

The Most Visible Sign of India's Revival is on Two Wheels (Profit Hunter)

Jun 9, 2021

Investing in the best stocks could result in wealth compounding on a massive scale.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Jun 18, 2021 (Close)