Public has not been participating in this relentless rising market. Yet the markets have been rising on back of central bank buying and corporate buybacks. Until there is a death cross (50 dma crosses below 200 dma), this is still a good market to trade up. Buy the dips and sell the rallies.
Sunday, July 20, 2014
Sunday, July 6, 2014
Indian government blames the hoarders for inflation but not the central bank
The new Indian government is back to old tricks. They are trying to blame the hoarders for rise in vegetable prices. When stock prices rose five fold between 2004-2008, did you ever hear the term stock hoarder? When real estate prices went through the roof, did you ever hear the term real estate hoarder?
When you print money, it goes into financial assets initially and financial assets become a bubble. If the central bank does not allow financial assets to deflate during an eventual recession, the economy goes into stagflation where commodity prices eventually rise faster than financial assets. What people want is that stocks and real estate should rise 100 fold but commodity prices should not rise at all. That is a mathematical impossibility. Prices of food items will rise in India even if you destroy all the storage and outlaw hoarding. There is no difference between a hoarder and stock investor. They are both in essence momentum traders. In a money printing environment, prices would rise regardless.
If you want to end inflation, stop money printing. And stop blaming the hoarder. Prices have been rising for sixty years, ever since silver coinage was removed. Could anyone have hoarded onions for six decades? Also, why are milk prices rising? Are cows hoarding the milk?
When you print money, it goes into financial assets initially and financial assets become a bubble. If the central bank does not allow financial assets to deflate during an eventual recession, the economy goes into stagflation where commodity prices eventually rise faster than financial assets. What people want is that stocks and real estate should rise 100 fold but commodity prices should not rise at all. That is a mathematical impossibility. Prices of food items will rise in India even if you destroy all the storage and outlaw hoarding. There is no difference between a hoarder and stock investor. They are both in essence momentum traders. In a money printing environment, prices would rise regardless.
If you want to end inflation, stop money printing. And stop blaming the hoarder. Prices have been rising for sixty years, ever since silver coinage was removed. Could anyone have hoarded onions for six decades? Also, why are milk prices rising? Are cows hoarding the milk?
Sunday, March 9, 2014
Where are we in the business cycle?
We are in a late business cycle. This is when momentum traders make money. Early part of the business cycle is when you can be a value oriented long term business cycle and later part is when you have to be a momentum trader with tight stop losses. It's still too early to go short. However selloffs in treasury bonds can also be looked at buying opportunity.
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