Lehman bankruptcy, Merrill Lynch acquistion, Global Meltdown - Are we doomed?

Meltdown of the markets following the lehman bankruptcy and Merrill Lynch acquistion, on one hand, provides an opportunity to pick up some of the blue chip stocks at attractive prices but I think only the bold and the experienced can have the heart to get into it. I, as a novice, was in double mind whether to pick up stocks and continue with my strategy of value averaging or just give up on investing altogether.

With the markets so bad and never ending shocks I had to think hard whether investing in stocks is such a sensible option after all. I know for sure that the markets can be very different in another 2 years time but the emotions were stronger than logic. Even though I was confused I did manage to pick up a small piece of Reliance Industries. But I learned something for sure during this past year - its no use listening to all the analysts out there. They seem to know as little as what I know.

Beginning of the year there was a herd shouting that the Sensex will reach 25k and just a couple of months ago there was another herd that predicted oil reaching 200 dollars. Where the fuck are these people and on what basis do they predict things.

Its very obvious that analysing the global environment and the performance of an index and that of companies are so god damn hard and, maybe, impossible that many of them were just guessing. I agree with some studies that some of the successful managers were just plain lucky and if you hold stocks for a long term then stock picks from a novice like me can outperform these highly paid and knowledgeable professionals.

Maybe I am just overreacting at how greed of these big banks and institutions is causing so much distress. They are not at fault totally since I also got into stocks to earn double figure returns and its in, well, most of us. They are also human so we can forgive them.

I truly think that the world is getting complicated all the time, people dont like things simple anymore. Otherwise why the need for such complex financial products? And people are now more materialistic, we are never satisfied with what we have. We perenially want better devices, better returns, better lifestyle, bigger houses, bigger paychecks and so on. I have the feeling that we, humans, are paving the path for our own destruction. Its clear everywhere you see!!

RK

Stocks to Invest during the month of September

I had mentioned in my other blog post the stocks that I am looking at the moment to put in, in fact I already did, my money. One of them is Tata Steel. I thought I will look at the various analyst/brokerage houses predictions for Tata Steel and see whose estimate was closer to the actual stock price.

My decision to buy Tata Steel is purely on its reaching its 52 week low. I do hear news about steel prices cooling down which will in turn reduce the margins of these companies but I assume this information has been reflected in the stock price which should be according to the efficient market theories.

The following gives the estimates from 4 houses which I picked from Rediff. One interesting thing is that Tata Steel's price has nose dived in the last few days which were after these houses published their recommendation. I don't know the reasons for this but lets see how far these houses are right. I will keep updating this post for any new estimates and track this stock progress.

Broking house Action Date Price (Rs)

Edelweiss Research Buy Sep 10, 08 1,035.00

Indiabulls Hold Sep 10, 08 605.00

Religare Buy Sep 09, 08 780.00

Merrill Lynch Buy Sep 04, 08 700.00

RK

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Tata's have the will to overcome obstacles with Nano

The following is another news item that shows Ratan Tata's will to deliver Nano on the promised date

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News Report:-

Tata Motors is all set to manufacture 1,000 Nanos at its Pune plant. The vendors have released their last lot of components for Nano on Thursday, which will be delivered to Pune within a day or two.

“Tata Motors, which is keenly watching the developments at Singur, is getting itself ready to rollout Nano in October. If the Singur logjam is not resolved within a fortnight, then they have to make some arrangements to roll out Nano from any of its plants. As of now, this does not look to be a part of the much-speculated Plan B,” Tata circles indicated.

Incidentally, Tata Motors had informed its 55-odd vendors of Nano to supply components for 1,000 Nanos by September 8 to the Pune factory. This was also confirmed by a leading vendor, who had invested in the Singur vendor park, and will be supplying sheet metal for Nano chassis.

Incidentally, nearly 3,000 components are required to manufacture a Nano. However, the vendors also feel that the Pune plant will not be able to meet the volumes that Tatas are looking at for Nano in the next two to three years time.
The official Tata Motors spokesperson told: “Tata Motors wishes to dissociate itself from any speculation regarding Nano.”

Interestingly, after tension escalated at Singur, Tata Motors had issued technical approvals to vendors which will enable them to supply components for Nano, if the car is produced at the company’s Pantnagar, Pune and Lucknow plants.

Work at the vendor park in Singur has come to a standstill after the decision on Sunday to stop work there till the joint committee zeros in on land that can be doled out to the landlosers.

A senior official of Rucha Engineering said: “We can only start work at the site if Tata Motors gives us the green signal and if the environment becomes conducive at Singur. Tata Motors has given us a October 1 deadline to be ready with our plant. As of now, we have not got any other communication from Tata Motors. We are hopeful that Singur issue will be resolved at the earliest.”

Skeptics answered - Tata's Nano passes Indian road test

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Here is the news for those skeptical about the Nano!! Nano passed the road test so its fit to be sold anytime from now on.

Here is the news report

The Singur plant may not be ready to roll out the Nano just yet, but the Rs 1 lakh car is now officially roadworthy for Indian tarmac.

The car was successfully ‘homologated’ by the Pune-based Automotive Research Association of India (ARAI), which handed over the Nano’s clearance certificate to Tata Motors last week.

This means that the car has met all the specified criteria for roadworthiness laid out by the government including emissions or noise & vibration and can now ply on Indian roads.

RK

Indian Retail slow down claims another victim - a big one!!

A RIL spokesperson said in an email, "We started the mart with 1,55,000 sq ft. We have right sized to 1,00,000 sq ft. We plan to use the excess space generated for other retail ventures in the pipeline."

This statement speaks the story. This is what was stated in CNBC

Reliance had to slowdown expansion and even downsize its hypermarkets, just two years since the launch of its retail operations. In Ahmedabad, it is leasing out an entire floor to other retail players, possibly an American restaurant. The hypermarket that started out over three floors is being reduced to two, the third being leased out

Too many players entered into retail in too short a period of time. This happens time and again -businesses trying to get pie of a market that has huge growth potential subsequently creating a bubble which can then only grow as big before it bursts. Virtue of patience is lost by individuals and businesses alike. Everybody wants to have those profits right now, can't wait for few years. This includes me as well, I don't have the patience to hold on to stocks that are stagnant but have good potential in few months time.

Warren Buffet is right when he says

"The stock market is designed to transfer money from the active to the patient."

RK
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