budget stocks

stocks to watch for budget 2009:-



1. fertilisers stocks:- stocks like
Rashtriya Chemicals & Fertilizers Ltd can buy for investment. which is going to post 10 r.s e.p.s and may pay div 25% against 10% last year. now it available at 30 rs. i am expecting double with in a next4 months. ( after seeing 3rd quarter results u agree with me )

2. Engineering stocks like Texmaco Ltd which is growing 70-120% annually

and sugar industries stocks are likely to rock the make ts already they are accumulated by big players. see the charts they are already at 2 months high

so dear investors be careful and invest and exit timely.


infrastructure stock also do well before budget. stocks to buy nagarjuna construction at 41 level

i am also interested in sintex which may go up for short term

India Economy: 2009 Forecast

New Delhi, 16 Dec. 2008 started out well enough with growth figures approaching 10%. However, with the massive financial troubles which began towards the end of 2008, 2009 does not look quite as good. The Asian Development Bank (ADB) has projected growth of a mere 6.5%. Previously, it had forecast 7%, down from another earlier estimate of 7.4%. ADB stated, “India, South Asia's most dynamic economy in recent years, is reeling from the direct effect of the global financial crisis on its banking systems and financial markets. The growth projection for India has been revised down to seven per cent in 2008 and 6.5 per cent in 2009, from 9 per cent in 2007.” In the first week of December, the World Bank anticipated the Indian economy would grow by 6.3% in 2008 and 5.8% in 2009. It realized a 7.8% expansion in the first half of this fiscal year against 9.3% a year ago. The economy grew by 9% for the entire last fiscal year. Inflation has been an ongoing threat in India, especially when it reached a peak of 12% in early August, 2008. Much of what drive this inflation is the country’s rapid growth and rising oil prices. Oil has fallen considerably since then, easing inflation. Manufacturing is expected to be hit in 2009 due to a decreased demand as a result of the global downturn. India’s growth is not totally dependent on the West, but the slumps in the US, Europe, and even the Far East will be felt in India’s exports. The Indian government will need to accelerate its reforms and push for more investment if it wants to maintain good growth rates in the face of the global slowdown. In a news conference with the World Economic Forum (WEF), CII director general Chandrajit Banerjee said, “"There is a pressure on bottom lines (of companies). Production is down. We do see economic growth moderating to 7.4-7.8 percent this fiscal.” "Since inflation is down, we expect more fiscal and monetary measures to give a momentum to growth. The government should increase expenditure in infrastructure sector and put on-going projects on the fast track," he continued, but dismissed fears of large-scale corporate lay-offs. The worldwide credit crunch has led to foreign investors dumping shares amounting to more than $12.5 billion, and the rupee has fallen in excess of 20%. The WEF said, "It (global crisis) could also weaken the balance sheets of the financial institutions, cause a further fall in share and asset prices, and challenge the macroeconomic situation due to shrinking global growth.” In November, Prime Minister Manmohan Singh warned that the global financial crisis may be worse and longer than many had expected, but that the government would take the necessary monetary and fiscal action to protect growth in India. Charles Cole, EconomyWatch.com

Financial Times View from the Markets: Interview with Rakesh Jhunjhunwala

rakesh jhunjhunwala. a private investor often referred to as India's warren buffett talks to
Joe Leahy,Mumbai bureau chief . about how the India equity market has reacted to the Mumbai attacks.
Mr jhunjhunwala argues that india has yet to experience the mother of all bull runs despite predication's of a slowing economy.


Disclaimer:

Your use of this webcasting service is subject to FT.com’s Terms, which we encourage you to read for full details. You may only access the service for your own personal, non-commercial use. FT does not guarantee that the service will be error-free or uninterrupted and FT does not give any warranties in respect of your use of it. The views expressed by the non-FT participants in the webcasts are their own and do not necessarily reflect those of the FT, its staff or representatives and to the extent permitted by law, FT accepts no liability in respect of any points of view so expressed

source: http://www.ft.com

Glodyne Technoserve Ltd

Glodyne techno serve, an emerging Technology Services company has expertise in IT Services, Technology Infrastructure Management Services and Consulting services across a number of industries.

Glodyne is committed to be a 'Preferred Partner' with its Technology Expertise, operational experience, delivery excellence, high quality services for its Clients. Our inspired professional team has a customer centric approach. We provide customized business solutions for our clients problems based on cutting edge technologies which enhances the overall efficiency and productivity.

Glodyne takes pride in being innovative and in offering one-stop services to its clients. Whether you are looking for an end-to-end software solution or a specific technical component for your business, Glodyne has the answer. This expertise makes us a reliable partner to take up application development projects that address business situations

IT SERVICES:-

IT Services offerings across industries include:

• Application Development & Management
• Business Process Management
• Business Intelligence and Data Warehousing
• Customer Relationship Management
• E-business Solutions
• Enterprise Application Integration
• Enterprise Resource Planning
• HRMS
• RFID
• Supply Chain Management

TECHNOLOGY IMS

Organizations invest vast sums of money to build IT infrastructure that support their business goals and objectives, in an ever evolving environment effective management of their IT resources becomes of prime importance. Technology IMS play a critical role in monitoring and measuring the performance of the technology deployed, across local and wide area links thus making the business more agile.

Glodyne provides a full range of Technology infrastructure management services through a balances on site-off site model. Whether it’s supporting the program management office or IT systems components such as database, Web server, or messaging administration, we are dedicated to providing solutions that are right-sized for the challenge, fit within the available budget, and can be delivered on or ahead of schedule.

We work in partnership with our clients to help reduce overall IT operations costs, improve service levels, and leverage information technology to support their business mission. In addition, we bring unique insights to the strategic challenges faced by our customers and offer creative solutions to operational issues that span the entire life cycle.

Our proven infrastructure management methodology ensures the most efficient and comprehensive deployment of services. Glodyne’s Technology IMS Services provides a strategic approach that facilitates cost containment and provides a knowledge domain to bring innovation and provide competitive advantage.

Glodyne focuses on the following service areas in its infrastructure management portfolio:

• Application management Services
• Data Centers
• Desktop Management Services
• Help Desk Services
• Network Management Services
• OS and Database Management Services
• Server and Mainframe Management Services
• Security Services

These services are offered as per the client requirements as:

• Annual Maintenance
• Remote Management
• On site Management

Equilibrium created between Remote and On site Management, which enables higher productivity, higher flexibility and cost reduction for our customers.

INDUSTRIES

Your industry is unique, so are the challenges that you face.

You need a partner that understands your critical issues and provides solutions designed to meet or exceed your specific objectives.

Glodyne has the experience in your industry to define, design and deliver the IT services specifically tailored to you.

Glodyne is an expert in delivering IT Services to the following industries:

• Media
• Energy & Utilities
• Banking & Finance
• ISV’s
• Automotive
• Manufacturing
• Healthcare
• Logistics
• Retail
• Telecom

it has 11Cr equity. posted 33.65Cr net profitlast year .current year for first half it has posted 32.26Cr as against 13.24last year .for third quarter it may post 19Cr and expecting for full year .in between80-90 Cr.

current price 181rs. it has fallen from 700rs. it is available at 2.5 p.e
one can buy for next 4 months . it may double .
even it is 400rs. p.e could be below 5

blind buy for a smart investors

Buffett’s Equation

A writer was commenting on how Warren Buffett was a principled man, and that his values translated in business success. What struck me was Buffett’s adaptation of Einstein’s equation for the theory of relativity. e = mc² (squared).

For Buffett, the success of a business can be predicted from this equation, with changes to what the variables stand for:

E = earnings, the lifeblood of a business.

M = management capability.

C = character of the management. Squared. The emphasis was on “C squared”.

No matter how skilled the management of a company is, the character of the business leaders is even more important for long-term success.

Source: Internet

buffett's comment - There is never a single cockroach in the kitchen.

Markets lap up Ambani reunion buzz

Shares of RIL gained on the expectation the company is close to resolving a dispute over the supply of natural gas to RNRL

Baiju Kalesh

Mumbai: Shares of Mukesh Ambani-controlled Reliance Industries Ltd (RIL) gained on the expectation the company is close to resolving a dispute over the supply of natural gas to Reliance Natural Resources Ltd (RNRL), controlled by his estranged younger brother Anil Ambani.

The shares rose 6.6% to a one-week high of Rs1,217.35 each at close on Friday on the National Stock Exchange. They gained because “there is an expectation that Reliance Industries may settle the dispute over natural gas supply”, said R.K. Gupta, a fund manager at Taurus Mutual Fund in New Delhi.

Three years after they separated, speculation is rife that the Ambani brothers, Mukesh, 51, and Anil, 49 may be burying the hatchet.

The latest rumour to do the rounds claims that a settlement could be announced as early as Sunday. This rumour also claims that ICICI Bank Ltd’s current chief executive K.V. Kamath, a longtime confidant of the Ambani brothers and their father the late Dhirubhai Ambani, and its incoming CEO Chanda Kochhar are playing mediators. It goes on to say that the two ICICI Bank executives met Mukesh Ambani on Thursday at the ICICI Securities office in south Mumbai in connection with this.

Kamath, the rumour goes, met Anil Ambani separately earlier in the week. Kamath played a significant role in mediating between the brothers before the 2005 split.

Both Kamath and Kochhar declined comment.

A spokesperson for the Reliance-Anil Dhirubhai Ambani Group said it wasn’t the group’s policy to comment on “market rumours and speculation”.

An external spokesperson for RIL said: “We categorically deny any rumours of an out-of- court settlement or negotiation of any nature. Any such rumour or reports are unsubstantiated and completely baseless. It is highly presumptuous to speculate or attribute motives on the nature of meetings of senior management of the company. We appeal to you as a responsible media house to abstain from publishing any hearsay, speculative and planted rumours by vested interests.”

This isn’t the first rumour about the brothers getting back together doing the rounds.

Another rumour has it that in late December, Anil and Mukesh met at the wedding anniversary celebration of their sister Dipti Salgaocar.

And still another has it that Mukesh Ambani has fallen out with his key lieutenants Manoj Modi and Anand Jain, who aligned with him in his fight against Anil Ambani.

HEARD ON THE STREET
Interestingly, the rumours first surfaced as the legal battle between RNRL and RIL over the supply of gas from the latter’s finds in the Krishna-Godavari (KG) basin intensified. RIL is weeks away from producing gas, but cannot sell it this till the case is resolved.

The rumours have been strong enough for RIL to issue a clarification on Wednesday dismissing them.

So, why does everyone want to believe that the Ambanis are even thinking of getting together?

One, it makes great press and is the Bollywoodish brothers-split-brothers-reunite kind of story everyone wants to read in these tough times.

Two, it is replete with economic possibilities.

After all, if the brothers hadn’t been scrapping, the merger of South Africa’s MTN and Anil Ambani’s Reliance Communications Ltd (RCom) would have likely happened, creating a global telco (one reason the merger fell through was because of legal complications that could have risen from a right of first refusal enjoyed by RIL in case RCom wanted to sell). And RIL would likely have been pumping gas from the KG basin.

An oil and gas analyst with a foreign brokerage, who declined to be named, said that the settlement would be a clear “positive” for RIL, which can begin to monetize its gas reserves from the KG basin. And it would benefit the Anil Ambani group as well, either through the supply of gas or cash compensation.

And the two groups would stop coming in each other’s way, added the analyst, referring to the aborted RCom–MTN deal.

Still, for all the buzz about a possible rapprochement, it can’t be denied that the two groups have done well for themselves since separating.

In June 2005, when the split happened, the combined market value of the group’s listed entities was Rs82,827.81 crore.

On Friday, the aggregate value of all listed companies controlled by Mukesh Ambani was Rs228,031.14 crore and that of all listed firms controlled by Anil Ambani was Rs94,301.72 crore.

Shares of companies belonging to both the groups saw a strong rally on Wednesday after Mumbai-based brokerage firm Avendus Capital Pvt. Ltd put out a report stating that a settlement was in the making. It added that as part of the resolution, Mukesh Ambani would take over RNRL and Anil Ambani would receive cash and control of RIL’s retail arm Reliance Retail Ltd.

RIL reacted sharply and on Thursday sent the brokerage a notice asking it to withdraw the report as well as tender a written apology, saying the report was “without any basis” and “completely false”.

Bloomberg’s Saikat Chatterjee and Sumit Sharma contributed to this story.

TIME TO LOOK AT .........THINGS TO DO

Dear All,

We'll are going through tough times and this tough time, especially from the last 3-4 months, have given us a good lesson. At least, I've learned a lot during this bad phase. I'm sharing such thoughts with all of you. It will help you also.

1. First of all, put this idea in your mind that you need to cut your expenses. If you think, all your expenses are fixed, give them a second thought.

2. Avoid using credit card especially when you're out for shopping. Make a list of items you need before you go to mall and then take only those items which are in your list. Avoid attractive schemes like "Buy 1 Get 1 Free". You don't need that even 1.

3. Make all your payments through NetBanking or through debit card. This will always show you current bank balance and will remind you your other fixed expenses.

4. Have a conversation with customer support department of your mobile phone and landline phone service provider. Ask them some good phone plan as per your usage or better ask for toppings on your bill plan. That will reduce your call rates and will save some money every month. If you're just 2-3 members at home, you may don't need landline phone with rent. Instead, figure out alternate prepaid mobile connection with goo validity.

5. Avoid loans on your credit card or personal loans. The interest rates are one of the highest in India. Save some money in bank every month and take the item when you meet your target.

6. Have a visit to your local general store. He may give you good discount now as compared to your "savings" and "points" of your favourite shopping mall.

7. Looking for some new mobile phone or some other electronic item. Try to get near Diwali festival. Many companies offers discount near festival season.

8. Going to office on your car everyday. Talk to your colleagues and friends and plan for car pool. You'll save on petrol and car maintenance charges.

9. You might need to look out your favourite channels list and discuss with your dish tv operator or look out their web sites for some good plans. You'll save some money every month there also.

10. Last but not the least, try to do some part time business along with your current job or business which will give you handsome money every month. That money will help you in difficult times. I'll explain this point in detail after few days.

Give me your views on above points. I'll wait for that.

Thank you, your business is appreciated! We strive to provide you with the best service possible. If there is anything we can do to serve you better, please let us know.

Regards
Gopal Krishan Doda
- IRDA, AMFI Certified, MDRT Qualified, CEO Klub Member Investment Advisor

http://www.InvestmentKit.com
http://www.DodaCharts.com
contact@investmentkit.com
contact@dodacharts.com
Ph: 09729070392, 09810800392

Tidings of a bear market rally

— James Saft is a Reuters columnist. The opinions expressed are his own –

By James Saft

NEW YORK (Reuters) - Some time before the end of the year it is a good bet that stock markets will throw off their gloom and begin a powerful rally of as much as 15 or 20 percent.

Some time one to three months after that it is a good bet that the prospect of a deep global recession and shockingly bad earnings will send them right back down again to make new lows. Rallies in the midst of bear markets can be sustained, powerful and feel very much like the ones that often mark the beginning of a real recovery.

So, why should we believe that we could get an early, if transient, Christmas present from the stock market?

Global markets are more scared, tired and depressed than at any time in my reasonably long memory, excellent breeding conditions for a rally. Given that most people are now on the same side of the debate, it would not take terribly much by way of money being committed to developed market stocks to send them higher. There may even be some momentum investors left who will pile on if a rally can get just a little traction.

The Vix index of stock market volatility hit a record high of 89.53 last week while the ratio of bulls to bears is at a several year low. And stocks have absolutely cratered — the S&P 500 index is down more than 40 percent this year and was heading lower at the time of writing.

Secondly, in historical terms valuations are as good as they have been in quite a while and increasing numbers of stocks are appealing to even the most hard-bitten value managers.

Perhaps most compelling, bear market rallies are simply what often happens in these circumstances. Nothing, not the housing market, nor the Roman Empire nor Alan Greenspan’s reputation keeps going in a straight line in one direction.

“Whether they are bull or bear, markets move in waves,” said Albert Edwards, the famously bearish global strategist at Societe Generale in London.

“You typically get three or four rallies by 25 percent within a bear market. And even though I think the S&P is going to 500 we should get a fairly healthy bounce at some stage.”

Edwards, who has been not just bearish but structurally bearish and who in September predicted a crash, has started to put a toe back into the water, raising his weighting of equities within a diversified portfolio.

He is still underweight equities, but has moved away from more extreme levels.

ARGUMENTS OF AUTHORITY

And it’s not just him. Both Warren Buffett and famed value investor and long time bear and bubble detector Jeremy Grantham have recently become more positive on equities, to varying degrees and in Grantham’s case with a proviso that we will ultimately go lower.

I hate arguments of authority; a long string of them have got us where we are today. The deal must be safe, the ratings agency called it AAA. It must be sensible to borrow five times my earnings to buy a house that just tripled in value, after all the bank is willing to lend me the money. The Fed must know what it is doing.

But that said, the arguments that we may have a rally soon, even an evanescent one, are pretty good.

Grantham looked at 28 bubbles which met his criteria since 1920, all of which, including now the recent bubble in the stock market, reverted to the trend line of growth. Earlier in October, he called S&P at 900 good value and said he would be a steady buyer, though he says he is reconciled to buying too soon. He acknowledges that in the largest bubbles, 1929, 1965 and Japan’s in 1989, the market overcorrected by substantial amounts. He thinks the index, which was trading on Monday at around 880, will bottom at between 600 and 800.

Given that reverses are always part of market trends, and especially given that few awful things in life are as terrible as they seem when first the shock sets in, I do think it is reasonable to expect a rally. It could be quite powerful and will immediately get strategists and talking heads reminding us that large portions of bull market gains usually come in the first few weeks of a recovery.

But though I wouldn’t bet against such a rally, I also wouldn’t buy it a season ticket. Let’s all hope that the financial system doesn’t fall over, but let’s not confuse it remaining standing with a recovery.
Analyst expectations for earnings in the developed world are still at laughable levels. And though everyone laughs at them, stocks still get sold off when they disappoint.

The ongoing deleveraging of the Western economies has further to go and anyone with any sense will admit they don’t really know what this crisis may throw up.

So, prepare yourself for a bit of holiday season cheer, but remember that a long lean period usually come after.

– At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund –

Risk Continues To Be a Four-Letter Word; You Should Continue to Avoid It

There are opportunities out there, an optimist would say. The question is, however, how much added risk are you willing to bear to seize them? The following represents my point of view; others may answer the question differently.

In short, my answer is to limit your risk. Since we first discussed the possibility of a bear market a year ago (see "2007 Returns Show Potential Warning Signs of a Bear Market"), things have only gotten worse and worse. Almost everybody failed to foresee the seriousness of the situation. And even now, almost no one is visualizing that yet another, and possibly even bigger shoe, may be waiting to drop.

A pessimist, I am not. But having a face-to-face confrontation with a worldwide situation seemingly losing its bearings more and more each new day, is not a challenge I am willing to fly in the face of.

There are those who may cut and run (or already have). Who knows? Maybe their actions will be proven correct. But while I don't currently plan to take on any new risks, I will not throw away my prior choices. (To see our prior and current Model Portfolios, and some contrasting thoughts, please go to my website at http://funds-newsletter.com). A sound plan may encounter many potholes, but the road is still worth taking. I have yet to hear an alternative route without serious potholes of its own.

How deeply do we put ourselves in harm's way? The man who invested his life savings into horse and buggies was likely wiped out when automobiles came along. (And the man with his life savings in General Motors stock had better be on guard too.) But what about those who choose to invest almost solely in stocks? These have not been good times for those so committed. Ten years running with virtually no results for the average US stock, while not a death knoll, suggests a single-minded path may not always be the wisest.

So where can one smooth over the bumps while the world, first, staggers and then likely, stagnates? Under a mattress, in money market accounts or CDs? Only if one wants a repository to store money. Why cash is seen as the place to hide befuddles me even more now that cash rates of return are set to drop to being nearly invisible.

So instead, my answer is my old, but generally unloved friend, bonds - see "No Bull? Bonds Can Trounce Stocks (and Beat Cash Too)" in my Apr. '08 Newsletter. Since that date, investors might be sitting on about a 10% bond fund gain vs. around a 2% gain in cash and a 30% loss in a typical stock.

And with nothing but bad news projected to lie ahead for the world, the gains should continue to be there for well-chosen bond funds, which can be more than just a repository. For example, the 1 year return on the Intermediate Term Govt fund we recommended in Apr. (Vanguard VFITX) is currently about 14.9%; for the Long Term Govt fund (Vanguard VUSTX) also recommended then, it's about 25.2% (data thru 12-29-08).

So, here's my advice. Stick with the stocks you still have (unless you have no choice but to raise cash). And be mentally prepared for the reasonably good possibility, although not certainty, that even worse performance lies ahead; stocks could continue to drop significantly although they will come back to reward investors given enough time. But for the foreseeable future, become a heavy-duty bond investor (at least until inflation as measured by the Consumer Price Index returns to a more normal level of about 2% to 3% - it's currently at 1.1% and likely to drop more in the months ahead).

The horse and buggy may be dead, and maybe even American car companies. But merely staying in one stationary place isn't a viable model for either people or investors. As interest rates and inflation fall around the world, getting a positive rate of return from existing bonds will become more and more desired by investors. As a result, you will most likely get not only a fixed yield, but capital appreciation as more people will want to own the currently best performing asset class around.

The last time we were more bullish on bonds than stocks was in our Apr. 2, 2003 newsletter. On that date, the S&P 500 Index closed at 881. As of Dec. 29, approaching 6 yrs later, the S&P closed at 869, approximately a 0% return. For comparison, the Vanguard Total Bond Market Index returned approx. 4.7% annually over those same dates.

Among the myriad of reasons I am so bullish on bonds is this: In Feb. 1999, the Bank of Japan dropped short-term interest rates to near zero, just as the Fed did this Dec., both in an attempt to fight deflation. Ditto for back in June 2003 when the Fed dropped its short term rate to 1%, which to that point, was an historical low. Deflation, inflation's opposite, is public enemy no. 1 (it occurred during the Great Depression). Once started, it is hard to stop (Japan had non-stop deflation between 1999 and 2006.)

What were the effects of these rate cuts on inflation? In Japan, over the following 3 yrs., the already low inflation rate did not stop falling and annualized deflation greater than -1.5% set in. In the US, the inflation rate also continued to drop after the 2003 cut for the better part of a year. But by the latter part of 2006, inflation, as was the case in Japan, was also lower than before the Fed's historic cut, although not in deflation. All this suggests that it will take a considerable amount of time before inflation stops falling and possibly begins to rise again.

Incidentally, what specifically is the Fed (not to mention other central banks) trying to accomplish by pulling out all the stops as it announced it was going to do in December? Of course, dropping interest rates is designed to make it easier for consumers to borrow and spend, which would help foster growth. But, although I can't prove it as I have no access to the Fed's inner deliberations any more than anyone else, it is likely they also have the following goals in mind:

• They want you to get out of money market accounts and CDs. Why? Because in order to get the economy, and esp. the housing market back on its feet, they want investors to continue to buy bonds which, upon comparison, will be seen to still offer somewhat better yields. The more bonds that are newly purchased (or bond funds), the lower intermediate and long-term rates will go (short-term rates can hardly go lower), helping to more quickly reverse the housing market's slide. And if investors decide to buy stocks instead, that too is a plus for the beleaguered stock market and economy as well.

• The government is in the process of borrowing more and more to pay for the various stimulus packages/bailouts. The lower the rates they have to borrow at, the less the cost to be added to the already staggering deficit.

• They would like to see the dollar fall even further which usually is a side-effect of lowering interest rates below those of our trading partners. The lower the dollar, the cheaper and more competitive our exports to those countries become, creating greater demand for our exports. Perhaps even more important, at the same time, a lower dollar helps to create a little more inflation here at home. A little more inflation would be welcome news to the Fed. Since the Fed dropped rates to 1.0% in late Oct., the dollar has fallen significantly.

  Fed chairman Ben Bernanke noted this link this back in 2002, as recently was pointed out in the Wall St. Journal: The devaluation of the dollar in 1933/1934 "ended the U.S. deflation remarkably quickly," he said. (Note: If the dollar continues to decline, this will once again be helpful to US investors who invest both in (unhedged) international stock and international bond funds.)

While bonds will likely not be the best investment for the next 10 years, as they have been the last decade, we expect the good performance to last for at least a year longer. But you should continue to stick to high quality bond funds as described in our Oct 08 newsletter; while there may be considerable opportunity for those who choose to invest in riskier high yield and long-term corporate bonds, we think it more prudent to await real signs of a recovery before committing.

As to whether government bond funds are in a bubble, I do not see the kind of "overheated" returns over the last 3, 5, or 10 years that jump out as obvious warning signs that investors have overcommitted to bonds. In fact, long-term "investor returns" (as defined by morningstar.com) in even the highly rated Vanguard Long Term Treasury fund are not really any different than the returns seen during other previous periods of slow growth.

source:Tom Madell Ph.D.
Publisher,
Mutual Fund Research Newsletter

The Sun Will Come Out... In 2010, Part- 2

What Can Happen Between Today and ‘Tomorrow’?

Anything. The Federal Reserve, ECB, etc. have pulled out nearly every stop to help the dying patients that are our economy and markets. I wake up every morning wondering what intervention I will face.

I made the comment today that "If you would have given me this Tuesday’s newspaper on Monday night, I would have lost money on Tuesday." Trust me that I am not proud of that statement but the markets have taken on a bit of a random, surreal tone of late as the authorities intervene in their vain attempt to attack short-sellers or, as I like to say, "Get Shorty."

The problem with "getting Shorty" is that the shorts are a source of demand as they eventually need to buy back their shares sold short. So while the SEC & Friends have lots of fun squeezing folks while changing the rules on shorting Fannie Mae (FNM), Freddie Mac (FRE) and 17 other important entities, they're rather myopic. No matter how much intervention, markets and stocks eventually find the correct level. I suppose you can slow it down but eventually, if companies are mismanaged and act with incredible hubris, they will eventually fail or be merged into a stronger and well managed entity as we fully expect will happen by 2010 in the financial space.

What other surprises could lay on the horizon for investors as the authorities attempt to prop up markets? I have the distinct privilege of knowing and interacting with some of the best minds on Wall Street. Everyone seems to be "playing close to the vest" as we have no idea what we'll wake up to tomorrow morning. Will short selling be changed back to the "up-tick rule" where stocks can only be shorted on a plus tick? Will short selling be outlawed? Will FAS 157 be revoked? Will the Federal Reserve become federal and not privately owned by member banks? Will margin requirements be loosened? Will the Treasury tell us they will buy S&P futures everyday to support the markets? Will Sovereign Wealth Funds be allowed to gobble up all of our ailing investment banks and regional banks? I could go on and on.

The key takeaway is that any and all of the aforementioned band-aids are indeed possible, but a tourniquet is needed for this patient. The party went on for too long and, like they say, "Payback is hell."

Summary: How to Be Positioned for Tomorrow

I believe the correct posture is one of caution, not to be confused with being bearish. I believe that every bet one makes must be measured and have considerable thought behind it. It's truly okay to miss opportunities but the big cyclical moves, even within secular bear markets, must be had. The same is true for cyclical bear moves within secular bull markets, which I believe could be a result of a combination of both time and price. Time could take us to 2014-2018, and price could take us back to the 1500-1600 area in the S&P 500 over the next decade or so with lots of opportunity in between.

One thing I feel true is that long only investing and blindly trusting the authorities, governing bodies and even many financial advisors that don’t understand and can't articulate the "Big Picture" could be a problem. I say all of this with respect to others in our profession, but this is not a market for newbies. In a nutshell, there is no substitute for experience and gray hair.

I do believe one thing for sure. The sun will definitely come out tomorrow. I just have to be around with my capital and my investor’s capital to take advantage of the sunshine.

Curriculum for Success

One last note, and then I welcome feedback. I have been speaking with my son lately about our industry and what classes to take as he is a rising junior in college and has aspirations in our industry in some capacity. Here's "Bennet’s Curriculum" for rising money managers and traders:

1. Macro-Economics. The big picture is key.
2. History. Investors make the same mistakes over and over again.
3. Accounting. Know how to read a balance sheet. Don’t rely on analysts.
4. Sociology. Learn "behavioralism." It’s not about being right, it’s about making money.
5. Psychology. Fear and greed rule, always and forever more.
6. Mathematics. This is not a game for children.

The rest, as they say, is history.

The Sun Will Come Out... In 2010, Part-1

The sun will come out, tomorrow
Bet your bottom dollar
That tomorrow, there’ll be sun!
Just thinkin’ about, tomorrow
Clears away the cobwebs and the sorrow
‘Til there’s none!
-Annie

Let me be blunt: The world is mired in a secular bear market in stocks.

1. The credit crisis we've been expecting is here.
2. Inflation on the things we need is on the rise.
3. Unemployment is increasing.
4. We're at war on many fronts.
5. Social acrimony is beginning to build.
6. Federal authorities -- from the Treasury to the Federal Reserve to the European Central Bank to the Securities and Exchange Commission -- intervene in our markets daily, making our lives as professional money managers more difficult than they should be in a truly "free" market.
7. Real estate prices are plummeting.
8. Credit is available for only a few very healthy companies - and for those that the Fed feels are important enough to bail out. The rest of us have to pay for our mistakes.

So, are you ready to walk off the nearest ledge yet?

The economy and the credit/equity markets are anything but a walk in the park these days. But hey, this isn't a game for amateurs, and this cycle will most certainly show us who a) understands the big picture, b) knows how to measure risk and c) knows how to preserve capital. Why? Because the sun will come out tomorrow.

Tomorrow may be a bit far off, but it's out there. The goal now is to make it there with your capital intact, and even with some gains along the way.

The difference between realists and “perma-bears” is this: “Perma-bears” wake up praying for rain and don’t like to plan for tomorrow. Realists, on the other hand, look to get through the rainy days, and then pounce when the sun's about to peek out again.

I consider myself a realist.

How Far Away Is "Tomorrow"?

Ah yes, the $64 billion question. Over the last few years, I've written a few different versions of the roadmap I expect financial markets to follow. No matter what methodology I use, I keep coming up with a "tomorrow" of mid- to late 2010 for equities.

This doesn't mean, of course, that money can't be made between now and "tomorrow."It just means that high-quality fixed income securities, low-beta investing and a hedged technique are the order of the day.

Folks are starting to figure out that traditional long-only investing means that you have to be invested for a long time. I have no problem with that philosophy, provided your time horizon is 100 years and you don’t mind 15- to 17-year periods where you don’t make any money (like the one we're in now).

Frankly, I have yet to meet an investor

with a 100-year time horizon and the patience to sit through a secular bear market in stocks - and the volatility that goes with it.

Why Is 2010 "Tomorrow"?

I'm a big believer in cycles. The greatest cycle of them all, and the one that I believe most influences markets, is the presidential cycle. For those not familiar with it, it goes like this:

1. What every first-term President wants is a second-term.
2. What every second-term President wants is:
a) a great legacy.
b) their party to remain in office.

The numbers speak for themselves: Stock prices and presidential approval ratings are almost 100% correlated. Since folks making money are much happier than those watching their portfolio values dwindle daily, this makes sense.

According to a Pepperdine University study, if you invested $1,000 in the Dow Jones Industrial Average on January 1 of the first year of every Presidential term and sold on October 15th of the second year for every year since 1950, your $1,000 would today be worth approximately $650, without adjusting for inflation.

On the other hand, had you invested $1,000 on October 15th of the second year of every term and sold on December 31st of the last year of every Presidential term since 1950, your $1,000 would now be worth more than $70,000. Can this be a coincidence? I think not.

History shows us that fiscal and/or monetary stimulus appears in the third and fourth year of terms, which, in turn, helps the economy and markets - under normal circumstances. The election comes, folks feel all warm and fuzzy, and then they vote for the incumbent.

At least that's supposed to be the way it works. But, alas, this time's truly different.
We've seen every kind of stimulus known to man (and I'm sure we'll see many more before tomorrow comes), yet the real economy and markets haven't responded. It's like being a doctor who calls for the crash cart and applies every emergency technique available, but has the patient die anyway. I really don't like using that analogy, since our family unexpectedly lost our 8-year-old Lab, Luke, last week, but it's the one I think most apropos.

If I'd told you a year ago that we'd have the Fed backstopping the JPMorgan (JPM)/Bear Stearns deal and creating all sorts of ridiculous term lending facilities, that the money supply would be growing at alarming rates while Fed funds fell from 5 1/2% to 2%, you'd have thought that the economy, credit and equity markets would be roaring, right?

Indeed, they are roaring, but in the wrong direction. So once the election (which should be a delightful mudslinging affair) is over, no matter who's victorious, the stimuli we've witnessed may very well be removed. And if the economy and markets haven’t responded to this latest record round of stimuli, just take a guess at how they'll do without it. Imagine a cardiac ward without a crash cart, and I think you'll get the picture.

There are other reasons to expect a 2010 low: Secular bear markets tend to last 16 years or so, which for new folks in the business will feel like an eternity. The preceding secular bull market lasted 18 years, from 1982 to 2000, and it was the giddiest secular bull market of them all. With that incredible run now well behind us, we suggest this current secular bear market will take the biggest toll as we recover from the last party-induced hangover of 1982 to 2000.

It's okay by me, since I'm positioned in a risk-averse fashion, tight risk controls firmly in place. Along with these long-term secular moves come shorter term cyclical moves lasting 3 to 4 years. Consider that the secular bear started in 2000 (at the height of the dot-com era), followed by a 3-year, gut-wrenching, 50% cyclical bear move into 2003, which in turn led to a 4-year, 100% move back to the 2000 highs by 2007.

It’s funny how arithmetic works. If you'd simply stayed invested the whole time (from 2000 to 2007), you'd have nothing to show for it except a lot of aggravation and massives losses in "emotional capital." I firmly believe that a vicious cyclical bear (within the context of an ongoing secular bear) began in July 2007 and will last the typical 3 to 4 years, bottoming out in mid- to late 2010, with a mind-numbing S&P 500 target of 700 to 900 or so.

I realize this all sounds terribly bearish. But if you flip it around. you'll see what we're really facing is an exciting period of opportunity for those who understand the big picture and are willing to adapt to the world around them.

What if I told you that I thought a 2010 low in the 700 to 900 range would be one of the best buying opportunities you'll see for quite some time? For those who've been "long only" since 2000, it would be just another rally back to my 2000 break-even point. But I fully expect this secular bear to end 15 to 18 years after 2000 at around the same levels of the 2000 S&P 500 high in the 1500 to 1600 range - which would be quite a nice move up from 800, no?

This is why we must admit where we are, not hide from it, work twice as hard as the competition - and be ready for almost everything in between.

WISH YOU ALL A VERY HAPPY NEW YEAR

Wish YOU all a very happy new year.

I wish all the contributors, readers and all members of the site a very happy new year.
Wish That 2009 year will bring prosperity and happiness

YOUR'S

ALLURI SAHADEVA RAJU.