Author: shyam

Being in it for the long haul

Fidelity has an interesting study out. The whole thing is worth a full read here.

While the only predictable thing about market behavior is its unpredictability, history has shown repeatedly that continued plan contribution and diversified, age-based asset allocation has delivered better results over time. During turbulent times, a steady course is most often the best one. A reactionary approach, including a focus on short-term market activity and related attempts to time the market, typically leads to poorer outcomes in the long term.

401k chart

 
 

Besides, how you diversify matters greatly. BlackRock:

The fact is that in times of stress, correlations of stocks and bonds rises greatly. And a traditionally diversified portfolio contains a high degree of equity risk.

 
 

asset allocation

 
 

Read the whole thing here.

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Is a bottom in sight for Gold?

The price of gold in USD terms is approaching the cost of production:

gold

Simple logic would dictate that gold miners will start mothballing mines if its no longer feasible to mine and ship gold.

 

It will be interesting to see how this plays out in the days to come…

Related articles

[stockquote]GOLDBEES[/stockquote]

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Weekly Recap: Retrospectoscope

NIFTY

 

Markets threw a taper tantrum that saw the NIFTY go down 2.42% last week. Banks were the hardest hit of the lot.

Index Performance

Index performance

Top Winners and Losers (CNX 100)

 

ZEEL +6.68%
INDHOTEL +8.05%
RCOM +11.83%
JINDALSTEL -15.92%
BANKINDIA -14.05%
GSKCONS -13.60%
RCOM continued its dream run. The stock’s one year return: +90.52%

ETFs

PSUBNKBEES -4.75%
BANKBEES -3.33%
GOLDBEES -2.73%
NIFTYBEES -2.26%
JUNIORBEES -0.25%
INFRABEES +0.02%
Banks got hammered and gold tanked.

Advancers-Decliners (CNX 100)

AD line

There really isn’t much for bulls to get excited about here.

Yield Curve

Bond yields continue to rise.

yield curve

Sector Performance

Here’s a more nuanced break out of what happened over the week across different sectors.

sector performance

Thought for the weekend

Risks are a bad thing, so focusing on the the risks does not sell your product whereas risk management is a good thing so focusing on that might help you sell. You can’t actually do good risk management unless you focus on risks – but the angst that gives a good fund manager need not be seen by clients. A good salesman will hide that angst because – well – what sells is the illusion of certainty.

Source: The conflict between managing funds and selling funds

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Taper Tantrum

So this happened…

NIFTY.2013-06-19.2013-06-20

… and not a single sector was spared the bloodbath.

sectorperf.2013-06-19.2013-06-20

 

Important stocks hitting 52-week lows:

BALRAMCHIN, KGL, DLF, GDL, PUNJLLOYD
CROMPGREAV, IOC, ANDHRABANK, BAJAJHIND, NMDC
BINDALAGRO, ANSALAPI, BALLARPUR, KSOILS, ALBK
HINDCOPPER, RCF, GTOFFSHORE, SIMPLEXINF, PRISMCEM
BANKBARODA, IDBI, NATIONALUM, HINDPETRO, HOTELEELA
CENTURYPLY, JPINFRATEC, PTC, APOLLOTYRE, VARUNSHIP
GAIL, BHEL, JPASSOCIAT, CHENNPETRO, DHANBANK
RENUKA, ALLCARGO, KEMROCK, NCC, PETRONET
GUJNRECOKE, CHAMBLFERT, DENABANK, RANBAXY, TATACHEM
IOB, MRPL, KEC, TORNTPOWER, JYOTISTRUC
SRF, TUBEINVEST, ENGINERSIN, OMAXE, COREEDUTEC
CORPBANK, GTLINFRA, INDIAGLYCO

It might be too early to go bargain hunting. But long-term investors should start licking their chops…

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The Onion Economy

Some of our regulatory bodies put out fascinating studies – studies that only tax-payer funded entities dare sponsor. I found this gem in our Competition Commission website: a report on the economics of onion markets. Some of its conclusions reiterate what our inner cynics had already judged:

  • Market structure of onion is unilaterally dictated by the traders, not farmers.
  • A few big traders having well connected networks with market intermediaries seem to play a major role in hoarding for expected high prices.
  • A clear case of oligopolistic entry barriers were found.
  • Farmers generally take reference of the local markets’ rates, while traders compare rates of all markets, including major distant and export market and then decide where to send their produce of a particular grade. This brings greater profits to them.
  • Export ban and arbitrary practice of fixing Minimum Export Prices (MEP) for onion often cost exporters in in terms of losing their credibility in export markets as irregular suppliers. Fixation of MEP makes small exporters reluctant to export which sometimes leads to excess supplies in domestic markets, leading to fall in prices.

Grab a cup of coffee and read the whole thing.

Source: Competitive Assessment of Onion Markets in India (pdf)

 

 

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