No vacation from decisions - The Honest Truth By Ajit Dayal
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Investing in India - Honest Truth by Ajit Dayal
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12 MAY 2008

May is a quiet month.
The children are out of school, the heat and dust of the Indian summer swirls around. The discussions begin on where to go for the vacation.
For how long?
With which group of friends?
And how much to spend.

Investing in the Indian stock markets - while on holiday.
But while the brain is lulled by vacations and the body needs to be repaired, life goes on around us.
A new war is born in one corner of the world, a new natural disaster needs to be dealt with in another part of the world.
Life moves on around us and markets jump around in random motion.

One day there is news that the world is running out of oil, another day we hear about the political instability in countries where much of the oil is produced. So oil spikes above USD 125.
Then we get news that the world is running out of rice, so rice jumps 50% in a few weeks.
We may be running out of oil, I guess, you cannot "grow" oil. But running out of rice? Well, farmers will grow more over time. And maybe prices will collapse in a few months. Like the price of wheat. There was a drought in Australia last year, the price wheat surged, the next crop is now being harvested and wheat is down some 40% from its peak in December 2007. It is still a 100% more than where it was in May 2007.
And May 2007 was vacation time.
Just like May 2008 is vacation time.

And the world has changed between these 2 vacation periods.
And where will the world be by the time of the next vacation?
We don’t know.

But we know that husbands will still love their wives and the wives will still love their husbands - for the most part, that is.
And parents will always love their children and always wish them to have the love and care that they need.
And we know that the "24x7" media will still try to predict every sway of the market; every little jiggle that the market makes will be amplified.

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So here we are, then, planning the vacation.
And thinking about our investments.
We have worked hard to earn a fair living and need to make sure that we don’t let our investments drift into oblivion.
No Wall Street firm is knocking on my door to pay me a USD 10 million sign-on bonus to blow them up again.
No press pundits are boosting my ego and the perceived market value of my skill sets.
So we need to plan our investments.

Investing in Indian stock markets - the Quantum funds.
Over the last year, an investment in the Quantum Long Term Equity Fund would have given an investor a return of +15%. Gold was up +32% over that same time period. (For those looking for a comparison, the BSE 30 Index gained +20% over the same time period - but the Reliance group companies accounted for nearly 50% of that increase; the Quantum Long Term Equity Fund does not own Reliance shares.)

The body and the mind may be in a "holiday mood" - well deserved, I am sure. But it is a good time to make decisions. And review the ones made last year.

We have not changed our view of the world: there is still a lot of irrational behaviour and the worst is not behind us in a global sense. But we believe we can identify a few investments that will make us a decent return on our investments.
Meanwhile, there is one "guarantee" that I can give you by the time your May 2009 vacation comes along.
Nope, I cannot promise you that the NAV of the Quantum Long Term Equity Fund will do well.
Nor can I promise you that gold will cross USD 2,000.

But I can tell you this: India will have a new government by May 2009.
It may be this government or a "new" government, but the election will be over.
And the rains will bring much relief from the heat and the dust.

Suggested allocation in Quantum Mutual Funds
Quantum Long Term Equity Fund Quantum Gold Fund Quantum Liquid Fund
Why you should own it: An investment for the future and an opportunity to profit from the long term economic growth in India A hedge against a global financial crisis and an "insurance" for your portfolio Cash in hand for any emergency uses but should get better returns than a savings account in a bank
Suggested allocation 80% 15% 5%

Disclaimer: Past performance may or may not be sustained in the future. Mutual Fund investments are subject to market risks, fluctuation in NAV's and uncertainty of dividend distributions. Please read offer documents of the relevant schemes carefully before making any investments. Click here for the detailed risk factors and statutory information"

Note: Ajit Dayal, the author is a Director in Quantum Information Services Private Limited and Quantum Asset Management Company Private Limited. Views expressed in this article are entirely those of the author and may not be regarded as views of the Quantum Mutual Fund or Quantum Asset Management Company Private Limited or Quantum Information Services Private Limited.

Mutual Fund Investments are subject to market risks. Please read the offer documents of the respective schemes before making any investments.


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