The return of the Stock Market

It has been argued for long that the selection of asset class is much more important than any particular asset in that class. Thus it is more important whether you invest in property, gold, cash or share rather than what property or which shares. Though not completely true for shares, atleast property prices are seen to rise and fall together. (Fall in property prices? Long time since we saw that happen!)

Another general observation is that when people generally start thinking that a particular asset class cannot fail at all, there is certainly a bubble waiting to burst. It happened to the stock markets in India in 2007 and to gold recently. The same feeling still persists for property prices, especially in cities like Mumbai.

So it has been proved that gold is no longer a safe haven. Property market is too optimistic for its own good and a correction is due sooner or later. Cash is never an option with the inflation rates seen in India.

So the only major asset class which does not seem inflated right now is the Stock Market. Also, there has been a huge drop in the earnings expectations. Mood was generally pessimist till a little while back. However, money has already started flowing in after the gold prices dropped. Inflation seems to be ebbing giving hope for a rate cut by RBI further fueling the rise. 

With the failure (or predicted failure as for property) of other asset classes, the rise in the stock market may sustain well beyond what is currently seen as a 100 meter dash. There is a very high probability that we are standing at the start of a very strong bull run. So better be sure not to miss out on it!

Migration as an indicator of growth

If carefully studied migration data could give the best results possible about the relative growth of geography. It instinctively explains the migration of people from rural areas to cities, migration of people across states and countries. Whenever there is growth, there is job creation and increased demand for people which leads to such migration.

It explains why Bihar and the other BiMaRU states are the biggest exporters of manpower. It explains the migration of individuals to the US and European nations from across the world. One may always argue that migration will also be due to the standard of living and the difference in purchasing power parity leading to increased value of remittances. However, that will only be a part of the reason and such reasons would be balanced by an individual’s inertia to move across geographies. So we may assume that the demand supply equation would be the major reason for migration.

Taking this simple philosophy, we may make many simple conclusions.

Bihar today is one of the fastest growing states. However, the migration has only reduced and not stopped or reversed. Thus the growth story is still not strong enough and may take some time to see a real reversal of trend. Any comment before that may be premature.

Gujarat has seen a huge uptrend in industry and thus a rise in GDP as well as migration to the state. However, it is also a great exporter of people meaning trade opportunities (the core competence of the locals) are growing elsewhere with lesser competition. Thus migration may not only show the growth of geography but also points at growth in sectors. Another example would be how industry migration gives insights on the same; thus people from all industries moved to IT at a given time signifying real experiential growth.

With all the talks of the (once) high growth rate of India, migration to India is still weak. On the other hand, though a relatively closed market, china has seen a better influx of people through manufacturing setups of global players.

India still looks upon US and the European nations as a dream destination. Thus the growth seen by the India is still not strong enough considering its talent pool. Also, it may point that US and European growth stories are still not dead.

The simple point is though numbers may sometimes tell a different story; migration data reveals the real and as-felt growth around us. It not only gives a preview on the growth of a region but also gives pointers on industry and growth of a particular social stratum.

Social media killed the Rockstar

While Rock music is apparently being overtaken by Pop music today; Pop music has had a great help from an apparently most unrelated development.

Researchers have tried to find the link between a person’s psychology and the music he/she hears. A brief of the research, at the risk of generalization, is as below. The research is biased towards American music but can be suitably extrapolated to music across the world.

Genre	Personal Traits
Pop	·         Extraverted, honest and conventional ·         Hard-working and have high self-esteem ·         Less creative and more uneasy
Rap and Hip/Hop	·         High self-esteem, outgoing
Rock / Heavy Metal	·         Gentle, creative, introverted  ·         Low self-esteem
Country	·         Hardworking, conventional and outgoing ·         Emotionally stable
Indie	·         Less hard-working and less gentle ·         Passivity, anxiousness and low self-esteem
Dance	·         Outgoing and assertive
Classical	·         More Introverted ·         Creative and have a good sense of self-esteem.
Jazz, Blues and Soul	·         More extraverted with high self-esteem. ·         Very creative, intelligent and at ease.

However, the results seem to vary across generations. The homogeneity seems to disappear as once compares results across ages where one generation majorly preferring one kind of music over other. So it is surmised that your personality along with the social setup determines the music one hears. But what is this social setup?

Music is not really a passive activity but also an expression of oneself. Thus Rock music gives the introvert a chance to express himself through the songs he listens and sings along. He appreciates the creativity and the strong lyrics boost his self-esteem. Rock music is just what the person needs; it gives him what he lacks within himself and completes him.

So Rock music was something that a generation needed to express itself. Oddly enough, this need is also fulfilled by social media today where a person can log into the world and express himself to the fullest; be it Facebook, twitter or any of the other popular social media sites. One can log into a news site and give one’s frankest opinion. Pour out his creativity in a blog. Today even the most introvert of all can have a voice which cannot be coerced. On a further note, social media seems like a competition not only to Rock but also other genres of music.

So while the need remains the same, with more/ better options available, the want has shifted to a more direct mode of expression and thus the demand for social media seems to be only on the rise.

India: The Doomsday Prophecy

It is striking to see how India has degraded so fast from a land of opportunities to a land of opportunist politicians (Is there another kind of politician?)

India grew in the real sense under the leadership of its then prime minister Shri Atal Bihar Vajapayee. On the other hand even his present day party mates seem to lack even a part of the vision that he carried. Point being that there seems to be no solace visible for development politics in India, this party or that.

The contradiction in the government outlook is clear. While the NDA built a strong base of infrastructure for entrepreneurial India to chart its own growth story, the UPA wants growth by doling out benefits (mostly unearned). While NDA provided employment to crores through its projects, UPA believes in providing unproductive employment thus wasting valuable human resource available.

Another addiction of the UPA is to provide everything free (or atleast subsidized). Subsidized fuel, subsidized fertilizers, subsidized food, free employment, free power. The country is like a wasted drunkard who earns little and spends all on his addiction. Rather than giving people opportunity to earn to buy the goods, UPA believes in either giving it free or doling out cash for the purchase.

India has done this before and it is doing it again. It will be of little surprise if India slips back to its Hindu growth rate in the coming years. What the government needs to do is clear. It needs to concentrate on infrastructure. It needs to build a capitalist economic model atleast to some extent. While India is grappling with power shortage, power generation should be encouraged and not held back due to subsidized rates. While Infrastructure is in no way acceptable, the reckless government spending should stop to reduce interest rates to make such investment lucrative for private players.

However, everyone knows that none of these changes are going to happen. The upcoming election will only see the rolling out and implementation of food security bill which will further empty government coffers. The probability of NDA, hopefully led by Narendra Modi, coming to power still seems low. It will be really painful to see the same things that have happened for the past decade repeat for the next five years. Opening up of more sectors for foreign investment is not going to suffice when the entire economic and business environment is stagnant.

Little wonder that the most probable/popular growth opportunity seen by youngsters today is a stint abroad, or better still a lifetime abroad.