Category: Economies


Yesterday I was going through some of the Indian newspapers and surprised to see some articles on Indian debtblog-3 market, which is a very rare scenario where the Indian market is dominated by equities. May be it was more a tax saving investment as the equity market where more volatile and IPOs were flopped.

Whereas the developed world debt market dominates where the bond market, has experiences gains and losses in response to cyclical interest-rate, It’s like business cycle during which an economy expands, contracts and recovers could be termed as market cycle.

Before getting back to the Indian bond market let’s try to see the key components of Fixed Income securities, it’s the Credit quality, yield, and maturities are key components of fixed-income securities.
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2015 in review

The WordPress.com stats helper monkeys prepared a 2015 annual report for this blog.

Here’s an excerpt:

The concert hall at the Sydney Opera House holds 2,700 people. This blog was viewed about 24,000 times in 2015. If it were a concert at Sydney Opera House, it would take about 9 sold-out performances for that many people to see it.

Click here to see the complete report.

The Big Short

The book is a fabulous read because of its simplicity. It’s not just for finance geeks; rather the stuff narrated

by Michael lewis is easy to digest. Although I still believe Liar’s Poker was one of the best work by Michael, but the Big- short seems to me is one of the best journalism written on the subprime crisis.

The reason I recommend to read the book because the movie is out on December 23rd and I still doubt people will follow. It has more characters and the derivatives, CDS market is not easy to understand .

The book is more focused on the vulnerability of the subprime crisis,how the big guns shorted the subprime market making it worse as they  provided the fuel which kept the subprime mortgage furnace burning even when the US was running out of new junk mortgages to write. The book quotes an example of a Deutsche bank trader Greg Lippmann ended up making billions of dollars for his employer — not to mention a $50 million bonus for himself — by aggressively going out and finding fund managers to put on the short bets needed to keep the market ticking.

How the Govt agencies Fannie and Freddie started accepting increasing amounts of subprime paper. Then banks started selling private-label subprime CDOs directly to investors, bypassing the GSEs; a lot of the profits in that activity came from taking the unattractive lowest-yielding tranches and insuring them with AIG.

In the process AIG was over leveraged it was not selling Credit default swaps any more. But then it gave rise to the synthetic subprime CDOs which were bought by Greg Lippmann sold by the banks.

This was the market with almost no pricing transparency in the secondary market: because all securitization deals are unique, the only way to get a feel for the health of the market is by looking at where primary deals are pricing. Whenever anybody said that the marks being put on subprime assets by banks and hedge funds were delusional, it was easy to point to the booming market in synthetic subprime CDOs to prove them wrong. No one, of course, remarked on the irony that the synthetic subprime CDO market was only booming because John Paulson and others were providing a huge amount of demand for bearish bets.

 

blogDid not thought of writing this post but the Diwali LIC incidence force me to share the thoughts where a neighbor uncle forced me to buy a LIC Unit Linked Insurance Policies (ULIPs)

ULIP as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the cases with mutual funds, investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis.

Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component. Continue reading

Whenever markets become too much volatile, the patience of the investor being tasted. There is a trend in the blogadvisory of the major brooking firms, All say that the long-term Indian story remain intact, and near term no one knows 🙂

The same Script……Market remains the same…just faces change… :-

  1. At 2 % Fall : It just a bull market correction…My goal is very long-term .
  2. At 5 % Fall : The monsoon is weak,but we have a strong government, anyways my hold period is more than 5 years.
  3. At 10% Fall : I should have had got out earlier,would have had made handsome gains.
  4. At 15% Fall : Bloody hell,I knew this was coming,the government is faltering,the growth is down,global economy is in doldrums.
  5. At 20% Fall: Now is the time to get out,China is in recession, Europe is in crisis ,the US jobs data has turned worse, I need to preserve capital.
  6. At 30% Fall: The outlook is grim all over the world,will wait more to reenter .
  7. At 35% Fall: Yup as I thought but the Fibonacci series tells that another 15% correction can be expected from here. I need to be patient,will enter around that period.
  8. At 5% Rise: It is a dead cat bouncing,will revert back.
  9. At 15% Rise: There is nothing in the economy to validate this rise, it has to fall,the market is not aligned with economy.
  10. At 25% Rise: The outlook is changing,the government is mending its acts,the global economy is rising,I will invest after a 5 % correction.
  11. At 40% Rise: Shit,I should have invested 35 % fall,but right now also there is value,I can make X Amount,Anyways

I am a long-term Investor…..

This scenario gets repeated again and again,An investor changes from having a long-term view to tracking technical points and then again starts having long-term view.The fall and rise of the market is always successful in changing the view points of the investor.Only those investors make money who are still intact on their decision..✔

Think what you are💭what you want to be😷& what can get you there😎

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