Friday, May 15, 2009

Pull up your sleeves, Recession is Over

I have been following the Global Economy and major Stock Markets closely. There are not much positive news, and things are moving from bad to worse. Any trial of the market to come up is nullified by the fear of another backlash, and the immediate profit bookings. This is the reason for Indian Stock Market moving up and down frequently in last few weeks. People are playing very short term game, and trying to recover their loses.

The Economy is bad, jobs are lost and real estate prices have fallen. Governments have pumped in huge amount of money to the market by increasing infrastructure spending and Central Banks have decreased the CRR and the Interest Rates. Too many things happening.

These are something thats in news, but what is not in news is -- WHERE IS ALL THE MONEY GOING?

Do you have any answer to it? Well I have some assumptions based on my knowledge. Everyone has money now. All have started saving from the big corporations to small, from big-shot celebrity workers to the blue color workers. All have fear of job and future income for the individual and the company, and they have risk adjusted reserves.

This money is atleast around $3 Trillion more than money present in the Pre-2008/09 Economic Crisis. This additional money is printed by various cash strapped governments lead by the United States.

My feeling is that, there is a need of major kick for the economy to rebound. And when it happens, it will make lots of happy faces and new world will see lots of new millionaires and billionaires. It has to happen and it will happen, afterall this Economic Crisis is no different from earlier crises [like Asian Crisis (1995-98), Great Depression (1930s), and Oil Triggered Economic Crisis (1970s)], and this will too go away with time.


While I have mentioned too many rosy factors, the incoming ride wont be too easy. The difficulty next year for many Nations will be to fight inflation brought by this massive influx of currencies to the Market. Govt. needs to be ready for sleepless nights fighting it, else social revolution is inevitible.

If you are an investor, go and buy the stocks. They are damn cheap now. My recommendation for US people is to buy Fair Isaac shares whose Market Cap is less than Annual Revenue, and Indian folks buy the ICICI Bank Shares (while there are too many good shares to buy; mentioned two as examples).

Happy Investing. Good Luck! Remember me when you become a big shot by following this advice :)

3 comments:

Louis said...

If the professional investors put 10% of their cash mountain back into the market it would push everything up and positive sentiment would return.

Nickle Sitoula said...

Even I wonder why people are so afraid. I guess this is the best time to invest. It will not only benefit an individual, but also the economy as a whole as it would promote cash flow.

Frisco said...

The point here is that people of the world expected Obama to wave a magic wand and the recession to go away. That is clearly not going to happen. India is so closely linked to US, that I don't see a recovery happening for 2 quarters at least. Read more about the world economy here: http://strat.in/2009/05/world-economy-green-shoots-or-burning-forest/

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