5 Yr Returns I China up by 20% I Rise of Personal Loans

Last 5-year returns: Indian Markets, China, Japan, US, and Nasdaq

Will reversion to mean happen or India will continue to gallop and outperform.

• Markets are down approx. 4% since its top.

• Chinese markets are up > 20% in the past 5 days (We had mentioned about China in the week before last’s newsletter) We continue to believe that unless the country goes belly up, there will be a significant reversion to mean over the next few years albeit with high degree of volatility.

• Election results, as expected seem to be disappointing for the central government.

• Nifty is trading at crucial levels of 25k – a fall below these levels could further open the gates for another 4-5% correction. Investors with a low equity exposure could deploy some moneys incrementally now (Though despite the risk of missing out, we wish to deploy over the next 3 months considering the number of triggers that could rock the boat.)

Rise of Personal Loans

The rise of consumer loans despite RBI’s stringent regulations point to a rising landline for the economy. I do feel a large part of these personal loans are for a) Highly discretionary goods , b) Stock market investing etc.

Any major stock market correction i.e. > 10%-15% (which mind it isn’t major) could in itself trigger a big cascading impact on both markets and the economy and hence what I recommend investors is sooner or later markets will be rocked by major corrections, having said that the next decade is one where a lot of money can be made and hence survival is critical so a) Don’t borrow for investing, b) Don’t invest into equities for < 3 year goals and c) Don’t check your portfolios every day.

• Nifty, crashes and technical by Nooresh Merani (Great read)

• India’s Middle Income trap

• Brand name lessons from Nike’s troubles

• How to play India for the long term

• SC upholds notices to 90,000 taxpayers

• Record rally in Chinese stocks

10,000% returns in a week 😉

No headlines can be very misleading