There no doubt on nifty will sky rocketingđ, based on their own risk appitate they can choose their investment.
If you wouldâve ask me i will choose equity 
.
The irony of this response made me laugh, got flagged for pointing that out 
Do we have enough liquidity to sell GSEC in secondary markets? Thanks
See there are certain aspects of economy from which we can definitely say where each asset class is headed. Remember itâs keyensian economics , I mean money print & inflation in long term by that I mean this economic energy needs to end up somewhere.
Now if you are talking about FTSE UK, I have not done complete detailed research on this but you can consider hang Seng index of China and Nikkei index of Japan as these indices have not gone anywhere.
Hang Seng index:-
Itâs exactly as you say , index has not gone anywhere, why? Because china is communist country, people there canât easily invest into equity like here or so I heard. But with all spending where is the wealth of Chinese people if not in index or gold ?? The answer is with their real estate. So if you are in China, it would make lot more sense to invest in real estate (buy houses) than index equity. But unfortunately they created a massive bubble with this and you know what exactly happened. There really is no point blindly saying hang Seng index never went and it sucks when wealth is ending up in real estate. A similar scenario happened in India as well which we will speak.
Nikkei index of Japan:-
Before 1980 , Japan had a massive bull run but after that they were in negative Interest rate for such a long time. You might be wondering I donât understand why none of asset class is even going up compared to yen. Thatâs because you can print money but unless people are taking loans, buying that new car, consumerism inflation wonât be created. This is exactly what happened with japan because japenese people are savers not spenders plus on top of that aging population. Spenders are of 20âs - 40âs age. Thatâs why their index hasnât gone anywhere neither is their real estate (not exactly sure here) and perhaps gold. And itâs good , if you are in Japan, even if you saved money out in bank , you can still survive. This is why investors buy japanese bonds because they know yen does not depreciate fast and itâs way crazy that people even accept negative Interest rate because Yen doesnât depreciate much.
The 1990 period to 2003 of India
Itâs hard to explain with nifty 50 , but easier to explain with sensex. If you look at sensex index 1990 to 2003-04 you might have realised index didnât move much. Why? Because before 1991 we had socialist policies, after that didnât work along with gulf war & rising oil prices , collapse of our trading partner USSR our economy really did take a massive hit. It was in 1991 when we formally opened economy after Chandrasekhar had to trade 47 tons of gold with bank of England and 27 tons of gold with union bank of Switzerland to raise 600 million. And so did begin liberalisation of economy.
But wait? You are saying the spending increased but why didnât index go up. Thatâs because as soon as that happened most of that went into real estate. It is here where the myth and craze for real estate began till 2003-04 . By then spenders increased , population also increased so thatâs when index started picking up. This is story of our index. We have the central bank printing money, we have the spender, we have the population.
The point if you were in india before 70âs, inflation wouldnât have been high. All you needed was one govt job(plenty of govt job were there) and thatâs it. You can marry your kids off and have retirement, no need to invest at all. If you were in 80âs inflation was slowly creeping so FDâs nd gold became popular. If you were in 90âs you would buy real estate.
As far now, the equity space in india is severely undervalued af because over 50% of wealth in india is in real estate. People even think of you as mad if you said equity is safe investment. With huge population, crazy spenders, economic opportunity along with NRI money nifty index & sensex index certainly has to go up!
Note:- this what I collected from my research. If there is anything wrong, do let me know
I really laughed at this question. If policies and transparent economy are good in short term you can print like hell and then you can shrink the credit later using higher interest rates which is what we are seeing now. However if govt does have massive level of debt , itâs simple print their way out. You will wake up and find bananas cost 50k . Gold is what helps here. Even in Sri Lanka, they had ridiculous way of being dependedent on tourism and has experiment with organic farming. So their imports increased because of food shortages later along with worse economy hammered tourism sector due to covid, their govt just printed their way out. thatâs why the inflation. If you were Sri Lankan you would have been saved if your portfolio had gold!
Sorry but this essay writing is always easy in hindsight (near impossible to predict future events, if so they are anyway already factored into the market resulting in no extra alpha)
how much gold do you even hold? 20% at the most? still leaves your portfolio bleeding when shit hits the fan.
(when a doomsday scenario does arrive, all gov backed and digital gold will also be worthless. In which case, do you even hold any physical gold?)
Guys chill. I just said what I did, because I felt it. He clarified and I left it over there. In no way I wanted to offend @GB26
May be I shouldnât be that blunt over here.
Itâs quite easier to predict if certain exteme cases donât occur like below
Now you maybe right, if we want war with China or Pakistan, if we get nuked or all politcians finally got sense went back to gold standard stopped defecit spending and Indian people also understood that there is no free lunch. But thatâs like saying tigers are going vegetarian because they understand benefits of eating veggies.
The majority of uncertainty is already rooted out. Even look at now, see where s&p 500 is and where nifty is, nifty didnât fall way worse , even the recovery of 2008 was faster than other indices. That alone is a good sign if you ask me to go with nifty
Yes 20% of my portfolio is gold. Equity will eventually recover by that I mean index with time frame of 2 to 4 years max. I certainly donât expect 7 year recession , our economy is not that worse as you think.
I definitely donât think of as Doomsday. The very purpose of gold is it will move during severe cases crash. I see it as wearing a helmet before riding a bike. Just because we wonât crash doesnât mean we donât wear helmet. thatâs how I see gold.
As far as doomsday, if value is pegged to gold , you can buy gold with government bond backed with gold(sovereign gold bonds I mean) even if hyperinflation is there. As far as digital gold, itâs good if itâs overseas. Physical gold? Well thatâs a sure shot way of attracting the kinda people that you need guns to deal with during doomsday.
Sorry for dragging you into this. Honestly didnât think pointing out something funny would be misconstrued as hatespeech/abuse & flagged. My mistake
Ohh btw I am not against gsec bonds at all. Itâs just the CCIL and RBI are suckers. Minimum lot there is 5cr to trade bonds. Wtf? And they expect retail to trade and complain why there isnât much liquidity for retailers. Duh, thatâs why my portfolio has 20% of gold.
It makes more sense to sell gsec bond for profit than to hold it till maturity.
I enjoyed reading this, and definetely not essay writing.
Remember vividly, when NRI made tons of money as few banks were offering Interest rate of 20% approx on NRE deposits where money would double in 4 years time. Resurgent India Bonds were offered in USD with interest rate of 7.75%. NRI could leverage 9 times their contribution with Local banks in the Gulf and invest in these bonds against pledge of the same.
FCNR USD deposit is above 5% now. Are we reaching there, God and Fed Chair knowsâŚ
1 Like
Wow! Never knew Chandrasekhar govt did this in a desparate attempt to replenish forex reserves though the irony is NRI was very less back at that time as going abroad and studying wasnât really popular like now because real estate wasnât really moving. So I guess that must be the golden era of FD! Though they equivalently had crazy ridiculous level of taxes though you can get away those days with bribes I guess. My mom used to say they used to pay monthly taxes for owning cycle and radio which I still find it hard to believe!
Some unbelievable stuff! My grandparents immigrated to a small village and the government was giving away the land to any settlers. All they had to do was register and they got the land for free! (some sort of land reform as far as I know)
Reasonable but this also means you have to sell as the markets move higher (to rebalance your portfolio). So, doesnât this mean that you usually miss out on those parabolic up moves that are the very reason for equity beating debt returns?
Obviously I do. The moment I feel market is overpriced my equity portfolio comes down to as low as 20 percent. Last I brought it down so much when we hit 18800 last month. I started adding again after we got back 18200. Now am at 45 percent in equity.
I keep switching a lot. So far beating benchmark index.
If nifty goes up 30 percent straight away, yes I will miss out. But thatâs fine. My risk appetite isnât so much.
Iâm referring to moves like when nifty 10x from 2001-2007. If you did this, you might not even beat the bond returns over larger time frames.
Essentially youâre highly invested into nifty when it is moving sideways (but bonds are giving +ve returns). Then moving your money out of the index when it does give parabolic returns.
1 Like
So in that case are you saying we should have 100 percent in equity ? Or whatâs the percentage of ones portfolio should be in equity?
I do not move it out completely.
But if you are talking about 10x returns, then yes. I will miss out.
@Jason_Castelino
Your goal is to only to beat the index? You are doing well, but for the knowledge and market awareness you have, you are limiting yourself with the strategy you employ.
1 Like
Not a criticism of anyoneâs methods. Iâm not invested into equity and only trying to figure out the logic and reasoning behind anyone who is.
From your own post, you said to have only 20% in equity (when perceived as overpriced). Even if your max allocation was 50%, you essentially miss out over 60% profits.
All equity around the world pretty much moves this way. Parabolic returns 30% of the time and sideways/down 70% of the time. So, you inevitability make your returns lower than bonds & also have huge drawdowns.