INSUBCONTINENT EXCLUSIVE:
We will start with my favourite strategist who makes a case for investing in only top 5 per cent frontier companies across sectors
Everything else with few exceptions will mostly not be good investments
Consolidation of industry is good for industry profitability
After all it is proven that oligopoly is good for profitability but airline industry has proven them wrong
Next is an interesting article about a strategy which not only allows you to prepay your home loan but also create wealth
reiterate that this is only a sampling of some of the best content I read through the week, with a dash of my own thoughts
While it is accepted that we are in an era of some of the highest ever inequalities, there is a persistent belief that the right remedy is
to generate faster growth rates
While true, it ignores the importance of asset classes in driving both growth and inequalities
In other words, financialised economies require constant flow of new debt to support asset values, which in turn make room for more debt to
enable asset prices to rise even further
Over the last three decades, asset prices have morphed into a lubricant, determining consumption and investment choices
Unfortunately, the same processes that drive values and growth are also responsible for inequalities
financialisation waves aggravate inequalities.
I would argue that India is also reaching that level of disparity otherwise how do you
justify having 40 per cent of your equity benchmarks represented by BFSI sector.
This has serious investment implications
Sadly, the omelette cannot be unscrambled; all solutions are tough
While there is a vibrant debate as to what can be done to relieve what are clearly severe social and political pressures, there is no
consensus, other than blaming multinationals and foreigners
As convenient scapegoats, these would continue to be the prime targets
The most rational corporate response is to hide and prepare and try to localise while reducing costs by aggressive use of technology
Societal responses are likely to include income transfer policies and wealth re-distribution strategies
None are likely to be easy and all would be controversial, thus further inflaming passions and solidifying extreme left and right, while the
centre disintegrates.
Victor closes out by recommending staying with top 5 per cent frontier firms, basically industry leaders who
cyclical stories, unless heavily discounted
But, back then aggregate Chinese prices were 24 per cent of US levels, the figure for India is already 29 per cent
Unless New Delhi can create opportunities for faster catch-up in incomes, further economy-wide price increases will only erode
As Andy summarises, our fixed cost structure is just too high to deliver profitability at current levels of income inspite of industry
consolidation (oligopolies)
READ MOREThe strategy not only helps you to prepay the home loan but also create wealth
Vijay Mantri explains in simple term about how best to combine SIP and home loan payment with an illustration
Currently, home loan interest is 8.6-9 per cent
For Rs 60 lakh housing loan, you pay close to Rs 60,000 EMI (equated monthly instalment) per month and over a 20-year period you pay Rs 84
So, you took Rs 60 lakh housing loan but through EMI you are paying Rs 60,000 per month
So, over a 20-year period, you pay Rs 60 lakh plus Rs 84 lakh, which is Rs 1.44 crore you will pay to the housing finance company.
You have
For the sake of avoiding any complications, take only Nifty, but you can take any other scheme
So, you have started Rs 20,000 SIP in Nifty
You are paying Rs 60,000 EMI and you have also started Rs 20,000 SIP
look at how your SIP has done
For the sake of convenience, if the IRR of SIP goes beyond 15 per cent, then it means markets are doing very well
months, then you take out money from 1-36 months
Take that money out because you have hit the 15 per cent target
It is not necessary that you hit 15 per cent target in 36 months
Sometimes, it takes 48-60 months
Whenever you hit the 15 per cent, the target you have in mind, you take out that money except the last 12 instalments of SIP and to that
extent you pre-pay your housing loan
So, this is a simple strategy.
It helps you to sell in the rising market
While selling in the rising market, you are also paying your liability
So, you get a lot of mental comfort that I am knocking off my liability.
On an average, you will be able to repay your 20-year housing loan
The market goes through the bull cycle of every 8-10 years
So, when you hit 15 per cent, the next 15 per cent will come in the fag-end
So, maximum you end up doing this exercise twice, but it will have huge benefits.
The above illustration is too simplistic, but it allows
you to get away from noise and strengthen your household balancesheet
More from the articleWhat is Economic Confidence Model and what does it signify The Economic Confidence Model (ECM) is a global business
This is reflecting a shift in global capital flows from Asia and Europe to North America
The Fed has raised rates twice this year and is expected to raise rates a couple more times by year end which may attract more foreign
capital into the US dollar with monetary policy remaining loose to very insane in Europe and Japan
We have the ECM, which has destroyed the European bond market, frozen like a deal in headlights
It is trapped, and it realizes that it has been buying the debt of member states who are now addicted to excessively low interest rates
If the ECB actually stops buying, interest rates in Europe will explode exponentially.
In Japan, BOJ has wiped out the bond market
The government actually bragged that they bought 97 per cent of the government debt auction
stability in bond yields and the yen
At least Japan is reducing its purchases whereas the ECB talks a good game but cannot actually do anything.
So what will happen when some of
this capital starts moving to the world largest economy
Read more to understand
