I agree. Cycles and asset bubbles are one of the consequences of playing with money supply in the system. As I said before, whenever fresh money is created, wealth gets transferred from savers to money producers. If you hold your savings in gold, part of your savings goes to gold miners every year. Is that bad for the savers and for the nation as a whole, as we are not gold producers? Yes.
But what other options do we have? We can keep our savings in fiat. But fiat is eventually backed by gold and USD reserves. And that is actually even worse, because fresh USD production is much more than gold production, as can be gauged from gold price gain in dollar terms after US abandoned gold standard. The producers change from gold miners to US government, but we still lose part of our savings, as individuals as well as nation, and in a much larger amount. Then isn’t it better to hold gold?
Holding an ETF is a good idea. But think about what an ideal market index ETF represents. It should be a fixed fraction of entire economy’s resources. So your purchasing power expands at the rate of economic growth, because you still hold the same fraction, but of larger economic supply. But isn’t that exactly what sound money (money whose quantity is fixed) gives? Since sound money has fixed supply, you own a constant fraction of right to consume economic produce. As economy grows and economic produce expands, you get to claim authority over larger amount of resources, though it is the same fraction of total.
Therefore if Bitcoin experiment succeeds, and it becomes the sound monetary unit of accounting for global economy, you no longer need a market ETF. You can get the market returns just by holding on to your bitcoin. One would invest only if they want market beating returns.
On a side note, value erosion from money production is in the ratio of fresh supply to existing supply. For platinum, the existing supply is smaller relative to gold, so even if platinum is harder to produce, the value erosion is higher and hence it is not a better store of value than gold.
I agree with @Divyanshu_Bagga that we have diverted from thread here .
But he has brought a very important point through stories of two currencies - Rai stone and glass beads .
In stocks also there are rare stocks - with great business fundamentals and management - that every one wants to own and hence become a strong appreciating currency vis a vis rest . Faster your Rare stock appreciates the more you can buy other stocks by selling so called RARE stocks .
Such Rare stock are hence part of core portfolio to beat inflation . but occasionally disruption happens because of credit cycle , commodity supply constraints , regulation, technology etc
New so called Rare stock emerges that everybody wants to own . and suddenly you realize that No one wants to own your rare stocks -
Sometimes the disruption is temporary (like in gold across generation ) and sometimes that disruption is structural ( like technology adv in glass beads ) . Unless you know the industry in and out at macro level you will miss out which stock is plain commodity and which one is rare .
But as with historical currency - if you play well wealth transfer will happen to you .
This thread is to identify where bear market are temporary and hence you can own RARE stocks at bargain prices … Lets stick to that by discussing our investment process and ideas …
I think the need for car will always be there.
This uber Ola thing is hyped out of proportion. I dont see anybody selling their car because Ola or uber is offering their service. The guys who are not buying used to give reasons like “traffic, parking issue, easy availability of rickshaw and taxi, bike is easy…” they have one more reason to show.
Currently Ola uber drivers hardly make any money and most of them use both Apps which means the number are skewed and incorrect. Drivers use them as per their convenience. Ola planned to buy taxis of their own but dropped the plan as its not worth…I have not seen people scrapping their buying plan because its unviable against Ola uber offers.
Also, uber in their ipo has mentioned they may never make profits. Do you think a company can be a going concern forever despite losses ? One day people will stop finding them. May be this will come earlier than the time when people decide to forego owning a car.
Ultimately Ola uber have to deal with drivers and so is true for their customers who have to shell out cancellation charges though its driver who plays truant. And we all know how they fleece during peak hours…
Ola uber have a long way to go. Atleast in India.
Last but not least, there are many households who have never owned a car…and it’s their dream. So whenever they can, they will. Ola uber cant be the reason for them to not buy a car.
Technology - electric or hybrid may be disruptive but not Ola uber.
I don’t think UBER or OLA poses any threat to the auto sector but the car rental companies are posing one for sure. The only drawback with UBER or OLA vs owning car is immediate availability, privacy and unknown driver behaviour. But all these are minimised in car rentals. This also gives flexibility to change and give a try to new vehicles.
If you are subscribing a car for several months and in middle of your subscription if you are ok to share, then the monthly EMI comes down well. The higher the days you mark your car free, the lower the subscription fees.
Here’s some calculation from zoomcar’s subscription for Nissan Kicks:
These calculations are right. And are as good as reports published on stocks by “research houses”.
I have twice used zoom car during vacay and it’s a good option to try new cars which otherwise we cannot.
I will try most of the times I get a chance. So it’s a good growing business.
VPs have many members dont know how many plan to forego car for these rentals or taxis. I for one have no such plans. In any foreseeable future.
Currently it’s like mobile phone, a must.
I dont think just because zomato and swiggy deliver at home people will stop going to restaurants.
I will answer your question though this is like digressing from the main thread …
After owning multiple cars for over 15 years I gave up in 2015 and have been using ride share …
I like to be free of non core asset ownership and their corresponding headaches . I don’t know about young 20 something but for someone in 40s – Ride share is great service to reduce on road stress , multitask or catch a nap when on road / traffic + use different car depending upon on occasion and whom I intend to meet etc …
Finally the current thread is not about auto and alternatives - Here we need to bring out if sector bull or bear market is structural or temporary and if so why … and thereby is there any opportunity to encash or learn from history .
Lets make this thread more useful and compact for all who want to learn w/o getting into personal opinions
All gloom and doom in small and mid caps. Not even dead cat bounce in many. Large caps are also looking fragile. Waiting on the sidelines for all the negatives to play out.
How do you correlate bond and equity returns
I agree with your views but I want to learn a bit more on how you have arrived at the conclusion. Did you read a book or something that made this link for you
No No … I am not correlating bond and equity returns .
Since 25% of investment was in bond and they appreciated by > 20% in last one year while equity returns were -5% in last year … My asset allocation got skewed and hence more cash had to be moved from bond to equity to get back to 75-25 allocation
Technically speaking strictly, us indices has been relatively stronger than Indian ones for past 24months…
There are definite signs of accumulation that is going on in spx and dji…
Nifty n sensex has an unclear picture as of now owing to the volatility we faced originating from both fundamental liquidity crunch, lack of earnings to several news deterring sentiments…
Never the less, a large number of midcaps are showing good base formations and most likely coming out of it to form a trend…
Since the global markets move in tandem, I would have bullish expectations from the US indices and India to follow…
But we do need to be cautious since, the previous highs of various stocks might be retested on any rally, and there is always a chance of failure to clear the prev high and a potential double top formation which is a bearish structure of the market technically…
Personally speaking, as of now I would be more interested in stocks which maintained their bull run valuations throughout the corrections and keep beaten down ones in radar…
i feel so too. most small cap stocks have shown strength lately, but i doubt this might be the diwali effect. rest lets see if this continues after oct too.
Market reversal to profit from capital gains is immaterial in this thread . That is trading … In trading you move with trend ie you are always bull in bull market and bear in bear market - You don’t go against the tide .
Being Bull in bear market means that you are able to accumulate good companies at bargain prices and the dividend incomes from them in long run will take care of your expenses and lifestyle .
There may be pain - possiblily sharp pain - No one knows how long will it last - But survivors will be rewarded as Structurally India is more destined to gain from global supply chain imbalances
Time to look at PF and increase allocation to equity - to 80% of PF
