“There is no doubt that India is in the midst of a digital renaissance and this will be very profitable for many companies and each will have to do due diligence to understand which ones are going to be profitable – if they are not already. – The future isn’t too far away. But when rates go up, those kinds of super long-term earnings are worth less. Maybe some kids are being taken out with the bathwater and it’s worth investigating them,” They say Mark MathewsMD, Julius Bere,
How are you overcoming this uncertainty due to geopolitical tensions? Are you seeing this as an opportunity or are you using it as a time to take cash off the table? Well generally geopolitics is reflected in the markets one at a time. When Iraq invaded Kuwait in 1990, resulting in a 17% drop in the stock market, it still took a long time to recover. So with very local things like this, I hesitate to provide too much insight because I don’t have any and these are complex situations in themselves.
If you try to explain Kashmir to an outsider in 30 seconds, you won’t go very far and I can’t do that with Ukraine. I don’t know much about the situation. I know so little that Putin has chosen to express his support for this semi-autonomous region – the Donbass in Ukraine’s Far East, where the majority of the people are Russian-speaking.
I suspect that the Ukrainian Armed Forces would like to confront the Russian Armed Forces directly because they know that they will not be given direct support by NATO. Surveys show people in European countries and the United States don’t want to send troops or get too involved in the issue. I can’t tell you when it will peak in terms of how it affects emotion. But I think a month from now, it’s highly unlikely that we’re going to talk about it as much as we’re doing now.
This event will not take place at the centre. How do you plan to pass this month in relation to the markets? I don’t think it makes sense to put much in the portfolio, purely on a Ukraine basis because the number one outcome is highly uncertain. Number two, I personally don’t think this is going to escalate into a real heated war. I think it’s simply a representation of the fact that the world is splitting into blocks and we’ve probably been in it for a while already – a cold war. This is unfortunate but the markets did well during the Cold War with the Soviet Union. I think they can do well in this situation and try to put a positive spin on it.
This is something that the Federal Reserve may point to to say that we don’t need to plan for what happened before or we won’t be as flamboyant as we’ve been planning to be earlier. I struggle to see the rates with too high and stuff like this in the background.
Three months or six months from now. We will remember and talk about this ugly patch of global instability in February 2022. In the end, will this be a blessing in disguise for the long-term investor? Is it time to mend your regrets and buy all the stocks you’ve wanted to buy but never got the chance to buy? I guess it depends on how low the market goes. If it goes down 20%, I’d say yes. It’s true that we haven’t really gotten out much, never since 1980. We are now around 8% which is less than average. I don’t think the 8% drop from peak after the kind of bull market we’ve experienced over the past few years is a buying opportunity. But there will probably be another 12%.
Are you saying we’re going to fall 12% more from here? No I don’t. I don’t know but people start getting interested in stocks at this stage. I don’t think it has gone down far enough.
What has fallen and really taken it on the chin are the new age listed tech startups – Nkyas, Zomato, Paytm. I don’t know how familiar you are with these names, but some of the IT names on the Nasdaq have been impacted as well. There is no correlation but it has largely been a synchronous decline. Is the place really worth visiting? There is no doubt that India is in the midst of a digital renaissance and this will be very profitable for many companies and each will have to do due diligence to understand which ones are going to be profitable, if they are not already, in the future. I am not very far. As we enter a rate hike cycle, that’s no doubt and I don’t think it will be as strong as the futures market is indicating or investment banks are forecasting. But when rates go up, this kind of super long-term earnings becomes less valuable. There are probably some babies being thrown out with the bath water and it’s worth checking them out.
Zeen is a next generation WordPress theme. It’s powerful, beautifully designed and comes with everything you need to engage your visitors and increase conversions.