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shalinisugumaran
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Joined: 29 Aug 2008
Posts: 58

PostPosted: Mon Oct 20, 2008 5:16 pm Reply with quoteBack to top

Recession is coming .... make your own judgment, don't panic !! Do what is wise.

The recession looks very eminent. It is really time to take pro active steps to avoid a painful time in the next two years which is how long the recession is expected to last.

Suggestions:
----------------

1. Don't take any loans; buy homes, properties with loans, or even cash. Keep as much cash as possible.

2. Pay off as much of personal loans, private loans, as debt collection will be hastened.

3. Sell any stocks you can even at lower prices.

4. Take money off from Trust Funds.

5. Don't believe in huge sales forecast from customers, be extremely prudent, lowest inventories, reduce liabilities.

6. Don't invest in new capital.

7. If you are selling homes/ properties/ cars, do it now, when you can get good prices, they are going to fall.

8. Don't invest in new business proposals.

9. Cancel holiday plans using credit cards.

10. Don't change jobs, as companies will retrench based on 'last in first out'.

Stay cool, wait, and if you took all of the above actions and more, you probably will be better off then many. This is not a rumor.

Bear Stearns is the first of many banking and financial institutions that will start falling in the not too future. If Bear Stearns can fall, so can JP Morgan, Citibank, HSBC, and the whole world. US economy falls, the rest will crumble.

India and all those self economies will be the most protected, but not gullible.

Europe may be a little stronger, but not China, another giant place Malaysia will see significant impact.

Remember, when the world pushes you to your knees, you're in the perfect position to pray
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nagulanjoghee
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Joined: 08 Jan 2007
Posts: 16

PostPosted: Mon Oct 20, 2008 9:16 pm Reply with quoteBack to top

Good One & timely.

The panic about the recession is making everyone a bit restless, particularly the working middle class group. My sincere advice to all is to stay calm and keep on contributing to what you do now. Do not think about quick and "frog-leap" changes till the situation becomes manageable and opportunities open up again. Endurance and thriving are the watch words.

When the going is tough , only the tough gets going !!!

Cultivate that power of Endurance..
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l_santhosh
Frequent poster


Joined: 16 Oct 2002
Posts: 143

PostPosted: Tue Oct 21, 2008 7:10 am Reply with quoteBack to top

Shalini,
It's just early days yet. No one can aver how severe or how long this downslide/ recession will continue. For example, when US goes into a recession(officially they've still not), most people believe it will go on for two years. This is mainly based on the fact that the last recession lasted barely two years. But Paul Krugmann, this year's Nobel laureate for Economic sciences, argues that it could last more than that this time around. That's because the last time around, after the IT bubble burst, the US was able to come out of it mainly because of the mortgages market. They just managed to pull themselves out before two years. But this time around, from the magnitude(huge) of loss of the sub-prime crisis(remember that this market is alone worth $15 trillion. if you want, read it again. It is fifteen trillion dollars. Just for comparison sake, India's GDP is ONE trillion dollars), he says no other sector could quickly salvage the US economy.

So it's just early days yet.
As to its impact on the Indian economy, definitely there will be an impact as around 40% of software exports to the US are to the BFSI sector. But the "shivering" sensation in the Indian economic scenario is not to be seen yet. But again, it is early days. The SWITCH companies(Satyam, Wipro, Infy, TCS, Cognisant, HCL) have reduced their fresher intake and many others have frozen hiring of experienced hands.
But still the general mood is not gloomy. So we can take some heart and plan what we could possibly do - as your 10 points say.

Loans:
Already, to hold the markets from tumbling down, the RBI and Government have taken quite a few steps of which some(CRR, repo rate) will directly affect the rates at which loans are disbursed by banks to the common man.
So we can expect the loan rates to go further down...which translates into lesser cost for owning a house or a car. But then again our salaries could be lesser.
But the point is that, one should not decide not to take a loan.
Flexibility is the best policy when it comes to managing money.

Investments:
Warren Buffett buys when everyone sells.
In January this year, the Sensex was climbing at nearly 21K.
Who might have had the audacity to predict that it will fall below 10000 in 10 months?
Isn't it such a mouth-watering oppurtunity to buy now?
If there was ever a BEST time to buy, it is NOW. That's because it will not fall below 9K and the only direction it can go is skywards.

BTW..
1. Bear Stearns is dead.
2. Yes, when the world pushes you to your knees, you're in the perfect position to pray. But in that position, you are best placed to pull the carpet underneath.

Just to extend what Nagulan uncle said,
when the going gets tough, the tough don't pray. They get going.

Do you want to pray helplessly?
Or do you want to pull the carpet, stand up and move forward?
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shalinisugumaran
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Joined: 29 Aug 2008
Posts: 58

PostPosted: Tue Oct 21, 2008 7:50 pm Reply with quoteBack to top

Santhosh,i perfectly agree with your views and nagualn uncle's advice.
Of course,when the going gets tough, the tough don't pray. They get going. So i dont want to pray helplessly.Surely we can pull the carpet underneath and we can move forward..

The ongoing financial sector crisis in the United States and its repercussions on developed markets worldwide will result in lower capital inflows into emerging markets like India .This, in turn, lead to a slowing in investment growth in the months ahead. As lending gets tighter and investment flows dry, corporate India will find it more difficult to raise both equity and debt. Spending money and going beyond our means is one of the main reasons for this situation today. In fact that is the cause for the current economic crisis in the US.

When we see all this happening, we can only remember the good old days. Then,karz was bad. People looked down upon those who took loans. Parents would not give their daughter's hand in marriage to a man with loans.But of course, the times have changed now. Everyone we know has a loan. The buzz word is EMI (equated monthly installment). Today, you can buy everything on EMI - a house, a television, an i-Pod.

Anyways, coming back to what caused the crisis. Imagine having Rs 2 lakh in your bank account, no regular income, yet buying a house worth Rs 65 lakh,in the hope of selling it for a higher price. Even if the price of the house fell by just 5 per cent (that is Rs 3 lakh), you will go bankrupt.
This is what Lehman Brothers did; with around USD 20 billion they went and bought assets worth over USD 600 billion. Isn't it suicidal and simply
foolish?
i dont have clear idea about sensex,do you mean to say its BEST TIME to buy..

But there are a few lessons that we can learn:

1. Live a balanced life and avoid overspending.

2. Not all loans are bad. Loans that are 'need based' (home loans,
education loans) can always find a place in your finances against those
that are largely 'want based' (personal loans, car loans).

3. Borrow only if repayment is financially comfortable.
A thumb rule: Keep EMIs within 30 per cent of your monthly income

As u said santhosh,Warren Buffet buys when everyone sells.. He has lived in the same ordinary house for over three decades,drives his own medium sized car and leads an extremely regular 'middle class' life. If that's all it takes for the richest person on earth to be happy, why do all of us need to take extra stress just so that we can get things which aren't even essential?

India still has a lot of growth ahead and the future holds immense opportunities for us. Let us make the most of it and save and invest it
wisely instead of wasting our precious little on things we don't need..
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nagulanjoghee
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Joined: 08 Jan 2007
Posts: 16

PostPosted: Wed Oct 22, 2008 3:31 am Reply with quoteBack to top

Terrific insight.. from EMI to International impact., Bravo. I am learning
Nagulan
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shalinisugumaran
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Joined: 29 Aug 2008
Posts: 58

PostPosted: Wed Oct 29, 2008 3:55 pm Reply with quoteBack to top

icon_smile.gif icon_exclaim.gif icon_smile.gif
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nanjundan
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Joined: 18 Jul 2005
Posts: 30

PostPosted: Wed Nov 12, 2008 11:39 pm Reply with quoteBack to top

Hi,

The ongoing financial crisis might be longer than expected.The losses are much more than projected and there will be more pain in the market.Corporate india is alreay witnessing the heat.RBI says no more easy money any more.Going forward we will see consumer led recession i mean the life style gets changed as there will be a degree of uncertanity of tomorrow.All our advises are keep your expenses only to essential things and if you have something so spare look at equity as an asset with an investment horizion of 5 to 7 years.
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l_santhosh
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Joined: 16 Oct 2002
Posts: 143

PostPosted: Thu Nov 13, 2008 6:58 am Reply with quoteBack to top

Hi Nanjundan,
It's nice to have the views of a self-employed investment banker in this thread icon_smile.gif
I agree with you that the crisis could drag longer than expected. In more probability, it will lead some developed countries(already Germany is one) to a recession.
At the time of going to press(I mean at the time of my last post in this thread icon_wink.gif how I wish I could be a writer ), things were still not clear. But now it is getting clearer. And the picture is, slowly but surely, getting murkier.

Corporate India's September quarter results have been poor. They have reduced their revenue forecasts for the next couple of quarters. There are red flags all over after Intel announced revenue forecast cuts in the past couple of days. And more is expected in this direction. But huge layoffs have still not been planned. Touch wood!! This is apart from the effects of the US treasury's U-turn on swallowing bad assets.

So stock indices could go down further. Sensex might breach 8k and stay at those levels briefly. So I guess there's still time for bottom-fishing.

Ok, now to the solutions!!

Since the fallout of the crisis last month, many solutions have been doing the rounds. Some of these have already been tried - interest cuts, providing loans to banks, etc.
Just to be sure, many economists never seriously expected these to stop the freefall.
But there were some other solutions which, proponent economists argued, had to be the way. And these were interesting solutions.
They argued for direct manouveres - invest directly in the economy. These measures will result in putting more money in the hands of the people, the consumer. That in turn will lead to increased spending that could possibly revitalise the economy.

How is this achieved?
It is achieved by increased spending by the governments.
In what ways?
Building local infrastructure, capacity building in PSUs(mainly manufacturing industries), etc.

This solution has got a taker in the form of a 'dragon'. Last week, China announced that it will be investing almost 600 billion dollars over the next two years to soften, if not negate, the effects of the slowdown. With its stupendous record at implementing policy decisions, the move will certainly bear fruit.

What can this do to the global economy?
First of all, it's a move that will catch the attention of the world. And then many countries could follow, although the results for individual countries will vary.
If more countries follow this, there is a very good chance that the slowdown will be short lived.
It will be difficult, though, to extricate some developed economies from this quagmire.
But India and many other countries will benefit with similar measures.

So even as times get difficult for some countries, for some like ours, it may not be as bad as we are now fearing it to be.
But then we will have to wait and see how things play out.

In short, tougher times lie ahead for all.
But developing economies could recover faster.
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shalinisugumaran
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Joined: 29 Aug 2008
Posts: 58

PostPosted: Tue Jan 13, 2009 10:30 pm Reply with quoteBack to top

Investment clock- it's 5 pm already


Image


Investment experts have often looked to a well respected technique called The Investment Clock to work out what they should do with their money next and in order to determine where we are in the current investment cycle.

We were first introduced to The Investment Clock concept as share broking rookies in the early 1980s and were often struck by how accurate it was at predicting what might lay ahead. The real difficulty was determining exactly where the hand on the clock should be placed at any given point in time.

The Investment Clock has been around since it was established and first published in London 's Evening Standard in 1937.

While not flawless, the clock often provides a useful guide for making investment decisions.

HOW TO DETERMINE THE TIME ?

'The economic climate at Twelve O'clock is boom time'. At One O'clock interest rates are rising. By Two, share prices start to fall and by Three commodity prices are decreasing as un-employment levels increase. At the moment, we are seeing commodity prices fall as part of the current cycle.

At Five O'clock, real estate beings to feel the pinch and at Six O'clock it is recession time.

At Seven O'clock the Reserve Bank begins to cut interest rates to kick-start the economy and by Eight share prices, anticipating an improving economy, begin to rise.

Commodity prices perk up at Nine O'clock and, as unemployment falls, real estate makes a comeback at about Ten or Eleven O'clock.

So, what's the time right now?

We're probably well past Four O'clock, where commodity prices and overseas reserves have already begun to fall. Our currency is presently under enormous pressure and this could be followed by the labour market contracting, money getting tighter and further falls occurring in real estate. These are the classic signs of a bear market in full swing with investor sentiment on knifes edge.

Importantly, however, time does not always divide up evenly on The Investment Clock, like a real timepiece. The actual times between Three and Six can be indirectly determined by special factors like demand for commodities, driven by China and India .

The US Central Bank and our own Reserve Bank now have a vital job - to cut rates enough to prevent a recession without letting the inflation genie come any further out of the bottle.

It is entirely your subjective judgment as to exactly what time it is now on The Investment Clock, yet this decision could prove to be very significant in terms of what might be ahead for investment markets and how this will impact on investors benefiting from getting the time right.

The following factors need to be considered in selecting the current time on The Investment Clock:

*Share prices are continuing to fall

*Many companies are finding it hard to maintain earnings and possibly their dividends over the next year or so

*Capital is now hard to raise, unless the company has or is close to achieving an earnings profile

*Investor sentiment continues to be precariously placed, with 'fear' well and truly taking over from 'greed'

*Commodity prices have now fallen significantly

*The property market is under huge pressure with clearance rates at auctions hovering around 50% and many vendors unable to sell due to unrealistic price expectations.

*Retailers are having the worse time in many years as consumers have stopped spending.

*The Reserve Bank has now dropped the cash rate by 300 basis points. Further easing is likely to occur up to March/April 2009.

*Employment begins to be an issue with a downsizing in the labour market a real possibility.

*Greater scrutiny of executive pay and a higher level of accountability expected .

*Fund managers are waiting with baited breath for a signal to move from a cash weighted position back into the share market .

*The inauguration of the new president in the US may well herald the commencement of the recovery cycle.

*No one can accurately pick the bottom of the market. Those that get close to picking it will benefit greatly in the years ahead
".


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