Will Stock market be in bear grip in 2008?- updated version-an astro economic analysis

This is an edited version of article first published on dec 13,2007 on all our three blogs ( www.kal.in, www.ckal.in  and www.Indiaconsulting.in ) and contains some updated and corrected information

 

This article brings together information and analysis from domain of economics and astrology that may be relevant for predicting how the stock markets may behave in 2008 .Some statistical and political inferences are thrown to give an overall feel of markets in 2008. Since the article was published  we cam across interview of financial astrologer Ashok Motiwani on CNBC TV 18 who gave a further corroboration of our predictions based on his astrological explanations/interpetations

 

1. World Markets: world markets are likely to go in to bearish phase especially US and rest of world following as recession fears in US  are looming large (see recent articles in Money Week website). Housing/subprime  crises in US and Europe  will affect the networth of consumers with negative effect on spending and investment. The crises means that Banks and especially investment banks  will have to curtail lending seriouly in order to  maintain capital adequacy norms. Put another way, amount of money a bank has leads to multiplier effect on credit generation throghout economy and when th capital is reduced as will be the case with huge write offs by banks ( still unwinding) credit contraction will also be several times the actual losses of banks/FIs.Less and not so cheap credit will mean a much weaker economy in US and Europe and very likely rest of the world.In this scenario huge amount of money could  be pulled out from stock markets. Given that markets are always subject to panic, greed and fear by turns, a bearish phase could well be preceded by severe market crash. Thus inspite of positive noises about Indian economy, we think Indian market could be as badly affected in short term because lot of FI money is in to India Funds and there are very few Buffett like investors who turn a blind eye to stock ticker once a great purchase has been made in stock markets

 

A situation of near staglation - inflation and slowng US economy could also put pressure on dollar vs rest of currency especially Yen leading to sudden unwinding of Yen carry trade as arbitrage opportunities under Yen carry trade have started to diminish with a buoyant Japanes economy ( thus end of era of zero interest lending in Japan) and lowering rates and depreciating dollar on the other.

 

Rising Oil prices could be another serious factor though oil prices unless driven by any unseen sudden political development(s) may be held back under a slowing world. Mr Ashok Motiani , the financial astrologer ( www.Indiamarketastrology.com ) in his interview mentioned that due to astrological configurations in 2008, oil prices could drop to close to $70 but gold prices could remain buoyant or at least not bearish till dec 2008) This seems to agree with the economic rationale but that does not rule spike in oil prices during course of the year well above $100

 

Finally an overbought Chinese stock market, should it collapse will have a domino or cascading effect like unwinding of Yen carry trade. ( It is mentioned in a Moneyweek article) that huge amount of investments around the world are on account of Yen carry trade hence any sudden unwinding ( condition for which are becoming ripe by the day) could have major stock  market melt down effect.

 

Looking at past record of Indian stock market we are in to "eight year itch" ( in 2008)  where Indian stock markets go bust every eight year or so( as stated in a CNBC Tv 18 article). Also note worse eight of ten Indian stock market have occurred occur in months of April-May   (this could well be due to role of Sun transit) and only once in October.

 

The major astrological reason for a possibility of a bearish phase according to us is the transit of Ketu-Rahu from the 4-10 house where ketu is conjunct Saturn in 4th house of investments, property, and affecting the tenth house of political developments. Interestingly transit of Ketu is occurring end of April 2008 a time when statistically market crashes frequently happen, a time when company annual reports will flow in reflecting all the effects of currency appreciation, interest hike effects of the last one year. 2008 is closer to general elections in India and recent election results have raised new questions about timing of general elections. All in all we got a heady mixture for 2008 that could make for a bearish phase in stock markets but may not last very long  According to Motiani, bearish phase will start in early May 2008 on account of retrograde Saturn. Our view has two aspects:  that stock market cannot be perfectly timed on basis of transiting planets as our current astrology carries some mathematical mistakes of which astrologers are not aware or how to correct these mistakes ( Please read Swami Yukteshwarji' book  The Holy Science on this aspect with great explanation of errors in astrology). Secondly events cannot be timed on basis of transiting planets  as like human beings countries too  have a birth chart and hence planetary period or dashas. Prediction cannot de done on basis of planetary transits alone. Dashas have to be taken into account. India is current running Venus-Mercury since 2005 ( hence the great bull run). From 2008 mid Venus Ketu will start which will last till Sept 2009. This period could see sharp movements in stock markets( both up and down) and  while it is not possible to analyze the entire year Month July till August 2008 could be very volatile but with upward bias overall. This is because of conjunction of Ketu and Venus in third house ( along with other planets. Ketu and Venus conjunction often seems to give abnormal stock market behaviour as seen in last Sept-October when the same conjunction took place

 

As mentioned India,s horocope shows that India is currently under major period of Venus- lord of finance and luxury -which is lord of lagna . Start of Venus mahadasha coincided with India's rise from balance of Payments crises in early 90s and a period of rising GDP growth rate. This will last till 2009 ( not 2011 as mentioned in first edition of this article. But Venus is not free from affliction in India's horoscope hence all the scandals in market have come up from to time. In venus –ketu starting mid 2008, IT stocks could see big resurgence as also possibility pharma life sciences stocks, and certain communication technology stocks .

 

Sun mahadasha starting in 2009 will provide further impetus to stock markets as lord of fourth house.

 

Bull run will continue much longer than most of can imagine but due to kaleidoscopic nature of planetary dashsas there will be important corrections and Rahu Mahadasha starting in 2025 may not very great ( foreigners could very well take over the stock exchanges ownership!!! (also  notice how Rahu in lagna of India horoscope in 1947 and coming back here every 18 years has been responsible for bloody scenes in India 1947,1965,1984,2002)

 

Also note sub dasha of mercury under venus ends in 2008 middle and ketu sub dasha starts providing an astrological conditons for sudden developments, excesses in stock marrkets, politics, financial scandals and political and economic partnerships

 

But overall we feel any corrections could buying opportunity

 

Note : This article may be edited over next few days with some new info.

 

 

 

 

 

Disclaimer: All risks of outcome based on this article to be borne by trader/investor

 

 

 

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Training programme: Short term predictions of markets using Tarot cards

We will be holding a training programme on " Using Tarot cards to make short term predictions of Stock markets" in Delhi around mid 2008 ; The programme will focus on intra day and weekly and monthly predictions with the following (tenative) components

 

1. New Meaning/interpretations of  most of 78 cards ( plus 78 reversed cards) in the context of stock markets ( meaning of some cards are still not clear)

 

2. Model for making tarot cards predictions of intra day swings in index like sensex,nifty,dow jones 30

 

3. When not to make a prediction

 

 

4. Identify days to keep away from trading

 

5. Days when net gains or losses can be predicted

 

 

To submit your interest in the programme please send an email at future@ckal.mobi.

 

Ps: please information about fees will be intimated later on these blogs

and on our mobile site ckal.mobi.

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Bear market in 2008?: as astro -economic analysis- updated version

The updated version will new and corrected information and analysis will be posted before close of the year

 

 

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Bear market in 2008?: as astro economicl analysis- updated version

The updated version will new and corrected information and analysis will be posted before close of the year

 

 

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Will Stock Market be in bear grip in 2008? an astro economic analysis

Posted on www.kal.in,www.ckal.in and www.IndiaConsulting.in   .See alos our mobile site Ckal.mobi .Call 9911698256 or 9312039121 for Intra day  predictions

 

This article well might be called Astro-Political-Statistical and Economic factors tha may cause a Bear Phase in the stock market in 2008

 

1. World Markets: world markets are likely to go in to bearish phase especially US and rest of world following as recession fears in US  are looming large (see recent articles in Money Week website). Housing/subprime  crises in US and Europe  will affect the networth of consumers with negative effect on spending and investment. The crises means that Banks and especially investment banks  will have to curtail lending seriouly in order to  maintain capital adequacy norms. Put another way, amount of money a bank has leads to multiplier effect on credit generation throghout economy and when th capital is reduced as will be the case with huge write offs by banks ( still unwinding) credit contraction will also be several times the actual losses of banks/FIs.Less and not so cheap credit will mean a much weaker economy in US and Europe and very likely rest of the world.In this scenario huge amount of money will be pulled out from stock markets. Given that markets are always subject to panic, greed and fear by turns, a bearish phase could well be preceded by severe market crash. Thus inspite of positive noises about Indian economy, we think Indian market could be as badly affected in short term because lot of FI money is in to India Funds and there are very few Buffett like investors who turn a blind eye to stock ticker once a great puchase has been made in stock markets

 

A sitaution of near staglation - inflation and slowng US economy could also put pressure on dollar vs rest of currency especially Yen leading to sudden unwinding of Yen carry trade as arbitrage opportunities under Yen carry trade have started to diminish with a bouyant Japanes economy ( thus end of era of zero interest lending in Japan) and lowering rates and deprecating dollar on the other.

 

Rising Oil prices could be another serious factor though oil prices unless driven by any unseen sudden political development(s) may be held back under a slowing world.

 

Finally an overbought Chinese stock market, should it collapse will have a domino or cascading effect like unwinding of Yen carry trade. ( It is mentioned in a Moneyweek article) that huge amount of investments around the world are on account of Yen carry trade hence any sudden unwinding ( condition for which are becoming ripe by the day) could have major stock  market melt down effect.

 

Statistically we are in to "eight year itch" ( in 2008)  where Indian stock markets go bust every eight year or so( as stated in a CNBC Tv 18 article). Further eight of ten Indian stock market have occured occur in month of April-May   this could well be due to role of Sun transit) and only once in October.

 

The major astrological reason according to us is the transit of Ketu-Rahu from the 4-10 house where ketu is conjunct Saturn in 4th house of investments, property, and affecting the tenth house of political developments. Interestingly transit of Ketu is occurring end of April 2008 a time when statistically market crashes frequently happen, a time when company annual reports will flow in reflecting all the effects of currency appreciation, interest hike effects of the last one year. 2008 is closer to general elections in India and when Left stand on Nuclear deal can no longer be ambivalent and when state elctions will show us which way wind is blowing politically allowing for crafty reorientations and change of political loyalty. All in all we got a heady mixture for 2008 that could make for a bearish phase in stock markets.

 

However India,s horcope shows that India is currently under major period of Venus- lord of finance and luxury -which is lord of lagna . Start of Venus mahadasha coincided with India's rise from balance of Payments crises in early 90s and a period of rising GDP growth rate. This will last till 2010-11.But Venus is not free from afflication in India's horscope hence all the scandals in market have come up from to time. 

 

Also note sub dasha o f mercury under venus ends in 2008 middle and ketu sub dasha starts providing an astrological conditons for sudden developments, excesses in stock marrkets, politics, financial scandals and political and economic partnerships

 

But overall we feel any corrections could buying opportunity

 

Note : This article may be edited over next few days with some new info.

 

 

 

 

 

Disclaimer: All risks of outcome based on this article to be borne by trader/investor

 

 

 

 

 

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Will Stock market be in bear grip in 2008?- an astro economic analysis

Posted on www.kal.in,www.ckal.in and www.IndiaConsulting.in   .See alos our mobile site Ckal.mobi .Call 9911698256 or 9312039121 for Intra day  predictions

 

This article well might be called Astro-Political-Statistical and Economic factors tha may cause a Bear Phase/stock market phase in 2008 ( with special refernece to India)

 

1. World Markets: world markets are likely to go in to bearish phase especially US and rest of world following as recession fears in US  are looming large (recent articles in Money Week website). Housing/subprime  crises in US and Europe  will affect the networth of consumers with negative effect on spending and investment. The crises means that Banks and especially investment banks  will have to curtail lending seriouly in order ot maintain capital adequacy ratio. Put another way, amount of money a bank has leads to multiplier effect on credit generation thorugh economy and whne this is reduced as will be the case credit contraction will also be several times the actual losses of banks/FIs.Less and not so cheap credit will mean a much weaker economy in US and Europe and very likely rest of the world.In this scenario huge amount of money will be pulled out from stock markets. Given that markets are always subject to panic, greed and fear by turns, a bearish phase could well be preceded by severe market crash. Thus inspite of positive noises about Indian economy, we think Indian market could be as badly affected in short term because lot of FI money is in to India Funds

 

A sitautionof near staglation with inflationa and slowng US economy could alos put pressure on dollar vs rest of currency espcailly Yen leading to sudden unwinding of Yen carry trade as arbitgrae opportunities under Yen carry trade have started to diminish with a bouyant Japanes economy ( thus end of era of zero interst lending in Japan) and lowering rates and deprecating dollar on the other.

 

Rising Oil prices could be another serious factor though oil prices unless driven by any unseen sudden political development(s) may be held back under a slowing world.

 

Finally an overbought Chinese stock market, should it collapse will have a domino or cascading effect like unwinding of Yen carry trade. ( It is mentioned in a Moneyweek article) that huge amount of investments around the world are on account of Yen carry trade hence any sudden unwinding ( conditon for which are becoming ripe by the day) could have major stock  marketmeltdown effect.

 

Statiscally we are in to "eight year itch" ( in 2008)  where Indian stock markets go bust every eight year or so( as stated in a CNBC Tv 18 article). Further eight of ten Indian stock market have occured occur in month of April-May   this could well be due to role of Sun transit) and only once in October. Finally the major reason according to us is the transit of Ketu-Rahu from the 4-10 house where ketu is conjunct Saturn in 4th house of investments, property, and affecting the tenth house of political developments. Interesting trasnit of Ketu is occurring end of April 2008 a time when statiscally market crashes frequently happen, a time when company annual reports will flow in reflecting all theffects of currency appreciation, interest hik effects of the last one year. 2008 is closer to general elections in India and when Left stand on Nuclear deal can no longer be ambivalent and when state elctions will show us which way wind is blowing politically allowing for crafty reorientations and change of political loyalty. All in all we got a heady mixture for 2008 that could make for a bearish phase in stock markets.

 

However India,s horcope shows that India is currently under major period of Venus -which is lord of lagna . Start of Venus mahadasha coincided with India's rise from balance of Payments crises in early 90s and a period of rising GDP growth rate. This will last till 2010-11.But Venus is not free from afflication in India's horscope hence all the scandals in market have come up from to time. 

 

But overall we feel any corrections could buying opportunity

 

Note : This article may be edited over next few days with some new info.

 

 

 

 

 

Disclaimer: All risks of outcome based on this article to be borne by trader/investor

 

 

 

 

 

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KalFund, Ckalfund and Mutual funds(why not to buy them)

Mutual funds should be bought by people who do not have much time to track markets or who do not understand stocks and stock markets at all- that is what "conventional wisdom" tell us. Howeve mutual fund industry inspite of increasing transparency under regulatory measures and media scrutiny still suffers from certain disadvantages ( See the  book-The Motley Fool Guide to Invesment by Gardner Brothers) cheif among them are

 

1. entry/exit costs which cna be higher than brokerage costs if you are atrue investor because most funds engage in frequent buying and selling and therefore act more lke traders and true investors in sense of Buffett  their portfolio resulting in increased transaction costs at the very least . That many ofthem fail to match the index most ofthe time is a  proof that their strategy is flawed.

 

2. Huge amount of money is spent on advertising,marketing etc reducing asset value

 

3. There may be adverse incentive mechanism at work in Mutual fund industry leading to managers churning portfolio in ways that affect the investors adversely

 

4. If argument that investors not having time or expertise should leave the work to MF mangers, the argument is at best partially correct. For understanding the jungle of Mutual funds whose performance varies with time, would require serious investment of time to pick and track their performance.

 

5. So let us construct two funds Kalfund and Ckal fund. First fund requires each investor nearly randomly picks on the best and well know companies after dropping the underperforming sector ( every year- it may be IT, automobile or pharma) and invests his funds in 10-15 companies without churing porfolio ( except once a year if a sector is under serious threat of underperformance e.g IT or export oriented company in coming year). Second fund we will construct by year end and track its performance withother mutual fund industry. The second fund will contain 10-15 stocks of all hue but still ignoring sector which is likely ti be serious uderperformer.

 

In the first case we will see if any investor having bought shares of 10-15 well known companies ( with equal investmnet in all) and without seriously churning his portfolio would have done better than index and most Mutaul funds overall and over last 3-5 year  period. ( to be continued by Dec 31)

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Information: mobile site ckal.mobi

Our mobile site ckal.mobi though visible currently ( the most recent version dec 3) has lost all the files and hence cannot be updated till further notice.

 

All Predictions wil be posted on www.kal.in and www.ckal.in and selected artciles on www.Indiaconsulting.in

 

Watch out for Prediction 3 of the Live demo series that may be posted in next 48 hours.

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Stock Market Crash in 2008, Kalfunds, Live Demo series

These articles will be posted on our blog within next ten days

1. Astro Economic Analysis of whether there will be a major stock market meltdown in 2008 in India 0n www.IndiaConsulting.in

2. Start of two benchmark funds ckalfund (all tyeps) and kalfund (midcap/small cap) to compare with other Mutual fund ( also why you should not buy MF) on www.IndiaConsulting.in

3. Live demo series on using our Predictions to trade in Indian US stock markets is currently in progress see www.kal.in and our mobile site ckal.mobi

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Do People underinvest in spiritual activities?- continued from previous article

To explain why people might be underinvesting in their spiritual growth and even contributing less than optimally to spiritual activities, we will now increasingly use terms used in "common economic and non economic" usage to convey the certain features of spiritual growth. We have in the previous post referred to spiritual growth as an investment where in "output" begins to flow after a certain period of activity or investment of effort. Without delving too deeply in to what constitutes "spiritual development" , it can be agreed that based on study of major faiths, there is certain final " Goal" to be attained at the end of the process,( known by different names in differnet faiths). Secondly again from the study of well established and widely practiced faiths and literature available on them, we can say that " time of Final Goal" cannot be predicted and is most defintely unknown to the aspirant and finally while there are positive "by products" of the practices, the process of growth towards the goal fromthe point of view of aspirant represents a flattish curve which at or closer to the time of " Final Goal" becomes steeper and steeper thus the spirtual growth curve may look almost like a "L" which has been rotated left on its axis.Finally and partly related to the above, as in "market for second hand cars" (See George Akerlof's book Market for Lemons"), there is asymetric information between buyer and seller about condition of second hand cars ( Buyer doubts car's true value and suspects seller is hiding facts). In case of second hand cars either market for second hand cars collapses or second cars sell for price below their true value .What is the parallel between the above example and our subject?. While there is no "seller" in our subject when we are dealing genuine Spiritual Masters, it is true that Masters know much more than followers when in two distinct ways (1) they know the true value of the methods, and the Final Goal neither of which they can convey fully to the aspirants (2) referring to our previous left rotated L shaped growth curve , it can be said that true growth of aspirants is known to Masters /Teachers which again they cannot fully convey to aspirtants generally. So aspirants for a long time do not know the "true benefits" of the process they may be undergoing through most of the process until the time " they have got in the car and driven it ". Putting it all togther we can summarise the following about the spiritual growth generally ( though there may be and are exceptions to this)a. Spiritual growth is high risk investment from the point of aspirant since unlike material investment, neither "work in progress" is visible nor the final time or true value or taste of the Final Goal is knownb. there is asymetric information betwene the Master and the disciple about the true value of the service being provided by the Teacher/ master/Guru.Hence to the extent people will generally 'Pay" or "invest" on perceived value of the service and on risks associated with the Final Product we can conclude that there may be significant underinvestment in spiritual development.From the above we can also conclude that as people beome more and more closer to the Goal with more "by products" to support their faith in initial and past investments they will increasingly invest more resources in such activity. A second conclusion is that people may be donating more as they grow but here adjustment needs to be made for other factors that might impinge on their ability to donate

To be continued: In the next article we will consider another major reason for sub optimal investment in spiritual growth

Our other sites are www.kal.in and www.astrogurus.com and ckal.mobi ( mobile users) for short term stock market predictions based on a model using Tarot cards

Do People underinvest in spiritual activities?- continued from previous article

To explain why people might be underinvesting in their spiritual growth and even contributing less than optimally to spiritual activities, we will now increasingly use terms used in "common economic and non economic" usage to convey the certain features of spiritual growth. We have in the previous post referred to spiritual growth as an investment where in "output" begins to flow after a certain period of activity or investment of effort. Without delving too deeply in to what constitutes "spiritual development" , it can be agreed that based on study of major faiths, there is certain final " Goal" to be attained at the end of the process,( known by different names in differnet faiths). Secondly again from the study of well established and widely practiced faiths and literature available on them, we can say that " time of Final Goal" cannot be predicted and is most defintely unknown to the aspirant and finally while there are positive "by products" of the practices, the process of growth towards the goal fromthe point of view of aspirant represents a flattish curve which at or closer to the time of " Final Goal" becomes steeper and steeper thus the spirtual growth curve may look almost like a "L" which has been rotated left on its axis.

Finally and partly related to the above, as in "market for second hand cars" (See George Akerlof's book Market for Lemons"), there is asymetric information between buyer and seller about condition of second hand cars ( Buyer doubts car's true value and suspects seller is hiding facts). In case of second hand cars either market for second hand cars collapses or second cars sell for price below their true value .

What is the parallel between the above example and our subject?. While there is no "seller" in our subject when we are dealing genuine Spiritual Masters, it is true that Masters know much more than followers when in two distinct ways (1) they know the true value of the methods, and the Final Goal neither of which they can convey fully to the aspirants (2) referring to our previous left rotated L shaped growth curve , it can be said that true growth of aspirants is known to Masters /Teachers which again they cannot fully convey to aspirtants generally. So aspirants for a long time do not know the "true benefits" of the process they may be undergoing through most of the process until the time " they have got in the car and driven it ". Putting it all togther we can summarise the following about the spiritual growth generally ( though there may be and are exceptions to this)

a. Spiritual growth is high risk investment from the point of aspirant since unlike material investment, neither "work in progress" is visible nor the final time or true value or taste of the Final Goal is known

b. there is asymetric information betwene the Master and the disciple about the true value of the service being provided by the Teacher/ master/Guru.

Hence to the extent people will generally 'Pay" or "invest" on perceived value of the service and on risks associated with the Final Product we can conclude that there may be significant underinvestment in spiritual development.

From the above we can also conclude that as people beome more and more closer to the Goal with more "by products" to support their faith in initial and past investments they will increasingly invest more resources in such activity. A second conclusion is that people may be donating more as they grow but here adjustment needs to be made for other factors that might impinge on their ability to donate

To be continued

In the next article we will consider another major reason for sub optimal investment in spiritual growth

Our other sites are www.kal.in and www.astrogurus.com and ckal.mobi ( mobile users) for short term stock market predictions based on a model using Tarot cards

Do people underinvest in spiritual activities?

To reduce spiritual activities to world of money and economics may seem somwhat gross to the spirituallyinclined.However the larger purpose of the work of which this article forms a small component is to draw attention and engage people to the possibility that rightly framed public policy can spur or be conducive to spiritual development of people generally certainly over the longer term. That is perhaps jumping too far ahead in our quest though a draft paper written two years back does attempt to relate economic development and spiritual growth with its tentative conclusions on role of education)

Spiritual pursuit may seem poles apart from worldly pursuits but both have at their core the common aim of increasing and maintaining happiness and /or removal of pain in its various forms ( See for example "The Science of Religion" by Paramhamsa Yogananda published by Self realisation Fellowship). There are other reasons why spiritual pursuits could be considered/studied with the standard and evolving economic and non-economic instruments ( such as controlled experiments or using data generated through controlled experiments).

1. First the ultimate goal of taking to spiritual endeavour as much in common with the aims/purpose of the worldly pursuits and that would allow us to compare one with the other in a limited way
2. The point (1) thus throws up the question of how people would allocate time and resources between the two category of pursuits since resources are always scarce and there are opportunity costs involved at least in the short and medium term
3. Thirdly there is consensus of what constitutes " Spiritual growth" ( See Varieties of Religious Experience by William James"and works of several spiritual giants over last hundreds of years)and while it cannot be meaured as per our present knowledge like income and expenditure, there may be ways to capture this measurement problem)
4. Fourthly Spiritual development has characterstics of an investment where the "output begins to flow" usually after a time which may vary from person to person

To be continued

Could people underfund in spiritual activities?

As part of our larger work on relating broad economic themes and spiritual development, we will explore whether there might be reasons that will make people underinvest in spiritual activities or sub optimally fund spiritual development?

Comng soon within a few days

Dollar deluge and subprime woes

In past few months dollar deluge, its effect on appreciating the rupee against the dollar and deletrious impact on India's export sector most visibly the IT sector - engine of India's economic boom in last many years has people of all hue quite worried- whether RBI bankers, IT people, other exporters or Government. The cut in US interest rates may deepen the problem as significant portion of dollar flowing out of bond market and even share market may find santuary in Indian share market. RBI has taken a few steps to check this problem over last few months. Following are some of other options which to best of knowledge RBI has not taken so far (??)

1. Subprime woes in US and Euroepan countries gives a great opportunity for cash rich Indians to buy real estate in US. This will considerably dent US dollar inflows. If such measures couldbe undertaken by other countries like China etc US housing market problem may see a soft landing. Incidentally this also shows that if there are more than one or two truly economically strong countries, suitable policy actions could result in win-win outcomes for all countries, mitigating business cycle impacts in one country and spreading its export around the world. Ofcourse riders could be put ( & will need to be put) on capital gains, repatriation of funds if properties purchased are sold off etc within a certain time period

2 Similary real estate companies could be allowed to take up ambitious projects abroad in JV abroad. This could provide valuable experience in learning by doing in hi-tech secure energy efficient residential and commercial projects with spinoffs in other areas in future . All of this need not by done in US where oversupply is a problem. What is true for share market investing is likely to be good for real estate investments as well- buy when chips are down and sell when prices sky rocket.

3. By extension allow Indian firms to take up /acquire key assets/natural resources abroad in a bigger way.

4. Also surplus dollars couldbe deployed by Govt/firms to take up high risk-high return projects which provided strategic advantage in future- development of state of art defence technologies if these are permissible, technologies which could application in rural areas, in medicine . Given the developments in Indian corporate world in recent years, there is probably a high appetite/unmet demand for highly visible, image enhancing and most importantly truly productive high risk investments in the cash rich corporate world . The list is limited by our imagination.

visit www.kal.in and www.astrogurus.com for stock market predictions. cKal.mobi an mobile internet version of site to be launched soon

Tackling Blueline bus Menace in Delhi

The recent spurt of accidents involving blueline has led to a public outcry for ban on blueline buses. Recently technical checks and installation of speed governors has been started as solution towards this problem. It is rather strange that no authentic study has been carried out ( at least not in my knowledge) by transport experts or published in leading newspapers.



Why banning blueline is not the solution?



1. This is so for a number of reasons. Delhi's transport problem will need to be attended to. Banning these buses will initially lead to severe transport crises as seen in last few weeks followed by possible mushrooming of servcies by smaller carriers who may very end playing the role of the killer buses in more ways than one. Crowding of leftover buses etc may pose other forms of transport hazards.

2.Banned buses will be have to used some way as otherwise loss of capital will be involved not to mention loss of revenue, unemployment.

3. Bluelines are not MIG-21 where in latter technical problems are suspected.



While we do not have the data on blueline buses and staff, we believe it is the latter that needs more finetuning and not merely the buses. Problem of blueline buses may linked to nature of incentives under which these blueline buses operate that sets up worst form of competition among bus operators/owners.

The following is set of reasons which we think may be leading to rise in accidents

1. It is well known result in economic theory of sharecropping that a farmer who tills a land after paying a fixed rent for land to landowner will overuse the land beyond optimal levels. It may be the cse with blueline operators who may taken thse buses on fixed rent and trying to maximize revenue from these buses by over running the buses, by overextending the staff . Fast and reckless driving to catch the travellor victims on the route, maximizing trips with concomitant stress on driver/conductor may be the outcome of such incentives.secondly bus operators to drive down down cost may be hiring low cost low skill drivers with limited attention to bus maintenance. Hence there may be case for changing incentive structure under which the bluelines operate. ( after all why does DTC kill so few people??)

2. too many operators competing on a single route may also lead to adverse behaviour by blueline staff as they try to outdo each other in picking up as many helpless passengers as possible. This problem can be minimized but not eliminated altogether.

3. Blueline staff may be compensated every six months for "accident free half year" even compensation at rate of rs 500 per month for driver and conductor will be much less than compensation that goes for victims in every six month period. Some form of award is required

4. To knock off every blueline for accidents committed by a few buses is contravention of principle of justice not to mention the new and more severe problems that overall ban may give rise to particulalry since there is nothing technically wrong with design of blueline buses. Hence along with award for accident free months, severe monetary punishment (apart for everthing else) to owners/operators such as impounding of the bus for 1-2 years and handing it to other operators may lead owners to better choice of drivers/staff and bus maintenance

5 Lastly incentive schemes may need to be devised that will automaticaly reduce speed of buses without need for speed governors. Some schemes apart from point point 2 above are a.setting minimum duration for each trip b. setting maximum nuber of trips per day over 8-10 hours service per day wil lead operators/drivers to slow down during actual travel to pick up more passengers. However challenge for implementing such schemes remain and here technical soltions recently suggested using electronic chip on each bus ( which they cannot mess with) may be useful

....may be continued

visit www.kal.in and www.astrogurus.com for stock market predictions

How to tackle the Blueline menace?

An article with some ideas on the above subject will be posted by Monday. Article on customizing weight reduction programme will be posted end of this week (July 28-29)

Did you apply for DLF IPO?

In our previous article we advised buying Unitech rather than apply for DLF. Our first target has been met i.e a return of 8-10 % has been acheived for those who opted for Unitech.

However DLF IPO as far as retail portion has been concerned has been underscribed rather than overscribed. Hence the risk is not of low allocation but low listing price arising from under subscription & possible full allotment to retail subscribers.

It is unlikely that DLF IPO will give 10% return on day of listing ( see our DLF IPO listing prediction to be posted today at www.kal.in and www.astrogurus.com ) and even if it should rise to that or higher levels we believe that new buyers can enter at lower levels and enjoy the same profits as the original allottees - well almost.

Coming next: Customize your weight reduction programme/strategy- musing of an non expert

why DLF IPO is not worth applying for?

( please double check information about DLF )

Reasons why you should not apply for DLF IPO (edited version)

1. Very few people think it is attractively priced

2. If it is heavily subscribed, retail investor may get at most 10 shares after locking in 1 lac rupees.Immediate return will not be more than 1000 rupees if DLF get listed with Rs 100 rupee premium . ( However since full amount need not be paid upfront economics shifts towards DLF IPO but this is also offset by correction of realty stocks in particular Unitech which has become attractive after going below Rs 500)

3. Shares like Unitech have gone down substantially from 52 week high and with bonus record date announcement anytime , share prices are likely to go up and more so following sentiment associated with DLF in next few days.Buying Rs 1 lac of unitec ( or preferably 50-60% of investment) will give full"allotment" in cash market and even 5% upside on current price will give more return than DLF in short run.

4. downside in unitech is limited. in case of severe down side of 20% one can invest remaining amount to average out. Unitech has consistently shown downward resilience.

5. DLF will list in July when a correction may take place because of interest rate effect of past year on Q1 corporate results will become apparent.hence DLF IPO listing premium is more prone to risk. however in case of general downside in market, because of low probable allotment of DLF , invested capital will be protected.

6. DLF landbank is heavily concentrated in Gurgaon which as far i know is also located on fault line. In any case DLF seems to have too many eggs in one basket .

7. Controversies aside, DLF will use a good amount of proceeds to buy land at a time whenwhen land prices are very high ( are are bid higher in commercial auctions) and bulk demand for mostly contiguous land will only put pressure on price at which land may be acquired ( adjust that for any bargaining power)

8. It seems to me parsvnath and Unitech seem better bet than DLF at current prices.

9. This argument may seem to apply for most IPOs. Not necessarily since those IPOs which are unique in an industry (DLF is not) or those IPOs whose competitors' shares are not attractively priced will continue to make certain IPOs attractive.

Disclaimer: Please make decisions after verifying all relevant information

IndiaConsulting.in

We have launched this blog in order to invite and provide discussions,queries, solutions to matters of general public interest- questions and issues that are being dealt with at various fora by experts. We aim to add to knowledge that is being created. However no problem is outside the domain of our interest and the wide range of matters that we might address or write on is best indicated by some of the important and relatively less important issues that we will write on .

1. How can use of "free goods" like access to Moneycontrol message board be improved?
2. Is there a link between economic growth and spiritual growth of human beings? Can the two co-exist ?
3. Should you apply for DLF IPO?
4. Are there solutions to Climate change ( global warming), terrorist attacks, populations pressure that we may overlooked?

So matters of wide ranging interest will be addressed but frequency of posts will be fewer than our two sites/blogs www.kal.in and www.astrogurus.com

sujat