Two champions, one trophy - The Honest Truth By Ajit Dayal
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Investing in India - Honest Truth by Ajit Dayal
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7 JULY 2008

The Wimbledon final between 5-time winner Roger Federer and challenger Rafael Nadal was, in all aspects, a clash of the titans.
For four hours and forty eight minutes the two champions clashed on the fabled grass courts. It was the longest men’s final in the history of Wimbledon.
In the end there was no loser.
But only one person could lift the trophy - and this time it was Rafael Nadal.
And the other winner was the sport of tennis: thousands of children will be inspired to become tennis players.
Two gentlemen traded hard shots for hours - and each applauded the other.

But not all fights are between champions.
Not all battles are for honour.
Not all battles are for any justifiable cause.

In the fight between "good" and "evil" one can hardly consider "evil" to be a "champion".
In the stock markets, there is the constant fight over "bulls" and "bears". There is nothing honourable or uplifting about this fight - much if it is driven by money and the desire for returns. Neither are, in the Federer-Nadal sense, "champions". Yet, unfortunately, the money from these financial games has inspired millions to be involved in the financial sector. Most unproductive use of powerful minds. But that is another story.

Multiple clashes, no champions.
Meanwhile, there are many clashes going on in India.
They will all be of "epic" proportions. They will be covered and analysed by an over-excited media. And they are likely to go on till the elections are over and a new government is in power.
The jostling has begun in many instances. Take the case of the fight between the Congress and the "Left Front". Again, neither are champions of the stature of Federer and Nadal. And neither will inspire children to become politicians in the future. Thank god for that small blessing.

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But everyone wants the trophy: the seats in the Parliament.

And now the gloves are off.
The Left has decided to keep India left out of any progress. A sort of strange stand when their gurus in China and Russia seek to modernise and benefit from exploiting capitalism.
Protesting against the increase in fuel prices in India because it will hurt the "common man" sounds idiotic when their comrades in China have just raised the fuel prices by 15% to 20%. Did anyone send a protest letter to China for hurting the "comrades" there? Hmm, maybe it is an "internal matter" that does not need any comment from the Left.

And the BJP? After having raised prices of petrol when they were in power, they are scared to come out and support the current increase in prices. After wanting a US-India nuclear deal, they are scared to say: we will support this deal because it is in the interest of the country. Please, the opponents of Congress should say, there is no need for you to make any deals with any political parties - we will support you in this deal.

But the BJP is in the "Opposition" - so how can they say anything supportive? They are supposed to "oppose". This is a battle. No one is playing to uplift the "sport" of politics.
The game is being played so that one person gets the trophy.
For another 5 years till the next election.
Or, until they have a falling out with their ramshackle coalition partners.

Collateral damage.
In the military, they have a term for the murder of innocent people: collateral damage. The poor bystander walking on the streets of Baghdad, Jammu, or Sudan as the bombs and bullets fly. Hundreds of millions of Indians hurt by game of politics. The statistical calculation of damage done to those who happen to be in the vicinity, while the politicians lob their missiles for personal gains.

The nuclear deal - and few really understand what benefits there will really be (I, for one, have no clue) - is now being turned into a Muslim or anti-Muslim issue. Only after it was reportedly not branded as an anti-Muslim move, was the Samajwadi party willing to support it. What has the future benefit for India got to do with religion? Not much, I would imagine, but it is election time. The development of India is a victim of the politics of the moment. Everyone is on pause till this election is over and done with.

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The stock markets will also suffer from this "collateral damage". There will be little real damage but there will be the damage of delays in policy making. And the damage of paying for the elections in some shape or form. These costs to businesses will be either a direct money contribution or lending out their resources (trucks, cars, jeeps, tractors, and people) to campaign for the politicians.

So things will slow down. And, if past indications are any guide for future outcomes, India will still survive yet another onslaught of the election season.

But the reason for investing will still exist: namely, to earn enough money to pay for your future expenses. And you still have the choices of where to invest your money. For pure safety of capital, but a decline in your buying power over time: bank deposits are the place to be. Or the Quantum Liquid Fund.

For trying to get higher returns - and taking some risk along the way - stock markets are still the best place to invest. But things can be rough, as they now are. Stock markets are down 38% this year. Ouch. Make sure you don’t need your money right now and have to sell your shares or mutual funds to pay for your bills. Consider an investment in the Quantum Long Term Equity Fund, our traditional long-only "value" fund. Or consider the Quantum Index Fund - this allows you to by the basket of shares that comprise the NSE-50 Index. The fund would be listing shortly on the NSE after which, you can buy its units by calling your broker and placing an order - or by using your online share trading service.

And buy some gold - you never know where things end up these days. Banks are blowing up across the world, the central bankers have printed too much money, and the politicians spend too much money all the time. If paper currencies lose their buying power, gold can offset some of that. Gold is up about 20% this year. Here again, you can call your broker and buy the Quantum Gold Fund - the NSE symbol is "QGOLDHALF".

While we wait for the politicians to become champions and give us a treat of the true spirit of competition - don’t hold your breath for this - keep on planning and staying disciplined in your investments. That is your trophy - and it is yours to keep. Not for one year, not for five years, but forever.

Suggested allocation in Quantum Mutual Funds
Quantum Long Term Equity Fund Quantum Gold Fund
(NSE symbol: QGOLDHALF)
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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