Oh, oh: a headline on the internet coming in from Business Standard "Domestic investors drive market to new highs".
In this article a few of the Star Fund Managers and Star Analysts who make a living talking the walk are quoted as saying that this is the Era of The Domestic Retail Investor. They are basically urging you to buy into the surging Indian stock market. The story notes that how FII's are selling at these elevated levels but buying by the locals - smart folks like you - is keeping the market racing towards new peaks. Dumb FII and smart retail buyer.
Should you be proud of that fact?
They lie, you fry!
Confession Number One: I am a, sort of, Fund Manager. And many companies I am involved with as a "promoter" are part of the "stock market activity": Quantum Mutual Fund, Equitymaster, PersonalFN...
Confession Number Two: We will never do - or say - anything to keep the commission income or management fee flowing. We will state what we believe based on certain assumptions, and the advice could be wrong. We are not the typical "promoter" who will push a story and suggest a lie.
Confession Number Three: We have been "wrong" for the past few months! Our advice to clients is to be careful. The client money we manage has high cash in the portfolios as we trim or sell positions in stocks and are waiting for a return to sensible entry points to buy shares. It is not good for our reputation to see a bull market raging! ☺
--- Advertisement ---
Why We Are Increasing The Price of Our ValuePro Service...
When we launched ValuePro a few years back, we knew people would be apprehensive about it.
Despite being based on Warren Buffett's proven investing approach, it was still an entirely new service. People didn't know how it would perform.
But we had complete faith in Warren Buffett's investing approach.
And our faith was justified when our own Buffett portfolio generated more than DOUBLE the return as the Sensex itself. Plus, it has also given individual stock returns like 213%, 169% and 45% to name a few.
So today, we have a solid track record. And we know that this investing approach really works.
Hence, we feel it's time now that we go back to the price we initially had in mind for ValuePro. That is Rs 30,000 per year.
However, if you act right away, we can offer you one last chance to sign up at the old price.
Click here for full details. Offer closes at midnight TODAY!
So, with these confessions confessed, let me suggest a string of assumption and facts that leads to a hypothesis:
With these assumptions in mind, one can state the hypothesis: One way to offset that decline is to get the locals charged up to buy. This keeps the "order book" healthy, the AuMs look good, and the professional hacksters in the field of finance with 3-letter degrees and a 4-letter attitude will have a great Diwali and year-end bonus.
- This share market rally since September 2013, is based 50% on hype and expectation;
- The rally is also 50% based on relief that the disastrous government policies of the Congress led UPA-2 would be reversed;
- The Modi win did nothing to share prices - the BSE-30 Index gained 1% on election day; admittedly, the Index had gained a blistering +22% till the announcement of a truly historic election outcome;
- The Budget was like the monsoon, below normal and way below expectations, the "experts" on TV shows were struggling to hide their disappointment;
- The Independence Day Speech was a rallying cry for much-needed social change but it did nothing for stocks or for the growth in earnings of companies - unless you are in the tiling, plumbing and toilet business;
- Your wealth advisor should be asking you to be cautious, not gung-ho. If you are under-weight equity, now is not the time to start buying and certainly not the time to go overweight! However, few people in the field of finance have any notion of integrity. And fewer still have any respect for the fact that they need to look after the interest of their clients. Clients are there to be fleeced, not served;
- If Foreigners don't buy and start to sell, there will be a problem in that share prices will start to decline sharply; India will be unloved and the financial firms will lose revenues.
Table 1: Now you see me, then you won't and there won't be any crows to catch the lies!
Since April 2014, the CY 2014 EPS revised down, CY 2015 continues to creep up
||Earnings Estimate of S&P
BSE Sensex for CY 2014
|Earnings Estimate for
|S&P BSE Sensex
|% Change in S&P BSE Sensex
Supported by the fairy-tale stories of good earnings growth (Table 1), they will make you buy at the top and then let you suffer the decline.
And, then, in the next Investor Education Roundtable hosted by a media house, they will claim - with the arrogance that would make Indira Gandhi proud - these retail people are fools: they buy at the top and they sell at the low.
I was part of one such Roundtable in 2013 when many of the same people being quoted all over the media with "buy now" signals said with a straight face how dumb you folk were to buy high and sell low. Being an MBA I can tell you that ethics is in short supply. And not having a CFA I can tell you that it may do little to add to ethics. Degrees - and net worth - are criteria used by lazy regulators living in glass towers to sift out the bad from the good.
The Honest Truth is that the professionals in the field of finance take the trust you place in them and take you to the slaughtering chambers with no remorse and no shame.
Beware. Be Sensible.
Suggested allocation in Quantum Mutual Funds (after keeping safe money aside)
||Quantum Long Term Equity Fund
||Quantum Gold Fund
(NSE symbol: QGOLDHALF)
|Quantum Liquid Fund
|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
||Keep aside money to meet your expenses for 6 months to 2 years |
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"