A load of crap from an idle brain

Took a week off from work to rest, relax and recharge my batteries.  We are already into the 8th month of the year and i had yet to take a single leave this year.  Not to mention haven’t fallen sick for more than 18 odd months and (touch wood), would like that to remain that way for a long long time to come.  It means that i hadn’t been taking any break from work.

Work has been too tough and nerve wracking ever since i moved into the new department more than 5 months ago (ya, time flies), not to mention colleagues who are of no use to the team but somehow manage to survive at work inspite of doing nothing productive. Ya, life is a big bunch of surprises.  The ones who work are questioned when there is a lapse on their end, but some people just laze around at work and unashamedly take the salary at the end of the month and no one even bats an eyelid.

Anyways, over a period of time have steeled myself to ignore such characters and sideline them.  There are others who are enthusiastic about work and they are the ones who really encourage me to look forward to going back to work daily.

But this week off was a much needed one.  Have been doing nothing but having good home cooked food, having my regular post lunch naps, wandering aimlessly around the city, reading books on the couch and most importantly watching the financial markets melt the world over.  Watching this self inflicted wound by the US not only to itself but criminally exporting its problems to the worldwide economies is simply mind boggling to watch.  Not to mention morons like Alan Greenspan openly bragging that this debt ceiling is of no issue to the US as they can print as much dollars they want.  Now beat that.

The funniest part of the whole debt problem is the reaction from China which blasted the US for its uninhibited funding of its consumerism by debt.  But why is China so worried about the debt downgrade of the US from AAA to AA+ by S&P ?  Its because China holds more than a trillion dollars worth of US debt.  The more irony comes from the fact that just a few months ago, some so-called Chinese thinkers were threatening to dump dollars that China is holding in the form of its foreign reserves to show who the boss is.  Which makes one wonder, if China dumps the dollar, which moron in the world wants to buy it?  And if it dumps the dollar and the value of the dollar takes a nosedive further eroding the value of the reserves its holding, who is China threatening in the first place?  Its like cutting the nose to spite the face.  The whole fracas reminds me of the saying that i had posted sometime earlier in this blog….

“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” – J Paul Getty

China today finds itself between the devil and the deep sea.  On one hand it needs to keep the yuan weaker by buying up all the dollars else the export oriented economy that China has carefully built up over the decades will collapse.  With thousands of riots happening countrywide, the Communist government doesn’t want another disaster on its hands.

And its not easy to make a complete turnaround of the economy from an exporting one to a local consumer led economy.  The transition takes years to happen. So, it keeps buying up dollars to keep its own currency cheaper and with the US dollar collapsing to newer lows, everyone is at their wits end trying to hold things together.

So, what to do now?  Nothing much..if you have money sit tight or start buying into blue chips in small tranches.  For the ones who sold off their equity holdings a few months earlier, i have nothing but admiration for your foresight.  For those who plan to sell during the collapse now, there is nothing more foolish decision than that.

Gold is scaling new heights daily as the US dollar loses its value.  Its gonna be a turbulent few months ahead.  Sit tight, there is much more trouble ahead.  Like the Oracle of Omaha, Warren Buffett once said…

“Its only when the tide goes out that you learn who has been swimming naked”

Pictures courtesy: Now Public, Guardian, wmpoweruser

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Even though the country as a whole imports more oil than what is produced locally, India is now the top petroleum products exporting nation in Asia.

India is now the largest petroleum products exporter in Asia, surpassing South Korea. According to the data compiled by oil and metal information provider Platts, India’s gross exports currently average 1 million barrels a day, inching past South Korea which exports 0.9 million barrels a day.

With the commissioning of a new refinery by Reliance Industries at Jamnagar and Essar Oil increasing refinery output at Vadinar, India overtook South Korea by mid-2009 and has since then consistently maintained the lead position.

India’s average petroleum products export grew from 0.77 million barrels a day in January 2009 to one million barrels a day in August 2009. In the current year, the average oil products export from India stands at 1.07 million while South Korea exports average 0.88 million.

In fact, India’s refining capacity at 3.69 million barrels a day is the third largest in Asia after China and Japan, which have a refining capacity of 9.6 million bpd and 4.64 bpd respectively. Platts’ compilation is based on the data from individual countries.

“Both Reliance Industries’ Jamnagar and Essar’s Vadinar refineries contribute more than 90 per cent of the petroleum products exports while the rest is by public sector oil companies,” said Ms Vandana Hari, Asia Editorial Director, Platts.

Read the full article here

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The stock markets have been on a free fall for some time now ever since the Greek debt crisis blew up.  The Euro has been going down vis-a-vis the US dollar.  The dollar has been gaining in strength even against gold. Does that mean all is hunky dory and that all the problems are over with the US dollar and the American economy?  No.  Whenever there is a crisis in the world economy, the money takes a flight to the US dollar.  And that’s what we are seeing now.  It doesnt mean that all the weaknesses inherent to the dollar have vanished

The situation now is mirroring the famous words said by some great soul “In the land of the blind, the one-eyed is the king“.

So, what does this crisis mean to people who want to invest for the long term?  Its the ripe time to buy.  Dont pump in all your money at once.  Buy good companies in small quantities.  The market might go down further from here. Buy some now and some more when the markets go down further.  Never try to time to market.  The markets might not go down further from here, and if you buy now, you would have still got some great stocks for cheap.

Am a big follower of Warren Buffett when he says “Buy when there is blood on the streets“.  It might not be complete mayhem now, but there are some great companies available for cheap.

I have bought a few more shares of the following companies

Alok Industries

Bharti Airtel

MIC Electronics

Punj Lloyd

I really hope that the markets fall further so that i can pick up some more good stocks at some great prices.

Important Note: Please dont follow my buy/sell advise blindly.  Do your own research or follow the advise of a certified financial planner before investing.  Iam not responsible for any profits or losses you make by following my investment strategy.

Above price charts courtesy:  Yahoo Finance

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When the Euro happened, there was widespread belief in the market that it was the way to go.  There were talks about a South Asian currency or even a South East Asian currency.  What was never thought about was how different countries developing at different pace, different societies and political situations could band about on a common currency.

A good article here mentions about the top 10 reasons why the Euro will fail.  You can supplement these theories to other economies too and see why the fundamental argument for a common currency is a non-starter.

1. One interest rate cannot be suitable for everyone

Quite simply if there is a single currency there must also be a single interest rate set by the European Central Bank.  For the single currency to work, this single rate must be suitable for all member states.  It is difficult to see how a single rate could possibly be suitable for all of the economies in all foreseeable situations.  Take for example Germany and Ireland in 2001.  The German economy is on the brink of recession while the Irish economy is booming.  The Germans would ideally like a low rate while the Irish needed a higher rate.  The compromise rate is not suitable for either Ireland or Germany.  This shows that in the long term the result is painful for both countries as both countries have an unsuitable interest rate. One size cannot fit all!

Read the full article here

Above picture courtesy: Bized

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After years of talking to many industrial and retail houses, the French retail giant, Carrefour has agreed for a retail alliance with Kishore Biyani’s Future Group.

Future Group will open Carrefour-branded franchise stores in the country under a deal signed three months ago, said the two persons, who spoke on condition of anonymity because an announcement is yet to be made.

Future Group plans to open between 150 and 300 Carrefour-branded hypermarkets in the next five years, said one of the two persons.

“This is quite ambitious given the challenges in finding right space required for such hypermarkets,” said the person.

Future Group, which runs Pantaloon and the Big Bazaar chains, will pay the French retailer a royalty for using the brand, said the person, who declined to specify the royalty amount.

Indian rules allow foreign multi-brand retailers to operate in the country only through franchise agreements with local firms.

Carrefour has been scouting for a partner for several years, without success. It has previously held talks with Bharti Enterprises Ltd, which teamed up with Wal-Mart Stores Inc., Wadia Group, and real estate firms DLF Ltd and MGF Ltd, among others.

In 2007, Carrefour started two separate units in India, Carrefour WC and C India Pvt. Ltd to roll out fully owned wholesale stores, and Carrefour India Master Franchise Co. Pvt. Ltd, which was to partner an Indian company to open the French firm’s branded stores in the country.

Full article here

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