Category: Your Money

At StockViz, one of the ways in which we help investors is through maintaining “theme” based portfolios, categorized by risk, style, etc. This way, investors can browse through different model portfolios, inspect their historical returns and choose the style that they are comfortable with. This is diametrically opposite of the prevalent practice of “tips”, “calls” and “multi-baggers.”  Michael Harris over at Price Action Lab has an interesting post up about market calls made by analysts that resonated:

Anyone who relies on  selective calls made by analysts, no matter how well-known they are or successful they have been, may never profit in the longer-term, since by virtue of the law of large numbers the success rate of those calls will approach asymptotically 50% on the average.

I agree with him. Most “analysts” only have a surface knowledge about what they are talking about. And this is made worse by a lack of process.

Trading the markets and investing in financial assets for profit should rely on well-defined, reproducible models that have a proven edge. Unless an analyst can prove that he uses a well-defined procedure to generate market calls, he may be instead generating noise based on subjective criteria and possibly cognitive biases.

Unfortunately, for most investors, it is extremely difficult to separate out the signal from noise. But you know what they say: nothing worth doing is easy

Source: The Net Value of All Market Calls is Exactly Zero

The Nikkei Stock Average closed down 5.2% today, hitting a four-week low (but up 30.7% so far this year.) The market there has been on steroids ever since the launch of Abenomics: an aggressive easing program to rid the world’s third-largest economy of over 15 years of deflation. Its goal? To get inflation up to 2%.

But how much can a central bank do? Its 10-year bond yield is already sub 1% and debt-to-GDP ratio is expected to hit 245% this year. Its probably got the world’s worst demographics: average age is around 47 years… and shrinking: the fertility rate is 1.4 children per woman, vs 2.1 that is needed to maintain a stable population.

In fact, Japan’s economy collapsed into deflation just as its demographics ‘rolled over’ in the mid-1990s.

Back in 2010, Dylan Grice had predicted Abenomics:

So the path of least political resistance will presumably be to keep yields at levels which the Japanese government can afford to pay, and to stabilise JGBs at levels which won’t blow up the financial system. This will involve the BoJ buying any/all bonds the market can no longer absorb, probably under the intellectual camouflage of a quantitative easing program aimed at breaking Japan’s deflationary psychology. Economists might applaud such a step as finally showing the BoJ was getting serious about Japan’s problems. In fact, it will be the opening chapter of a long period of inflation instability.

Grab a box of popcorn, the show is just getting started.

Source:
Rethinking Abenomics
Dylan Grice on Japan

Related articles

• What If Abenomics Is to Policy-Making What Subprime Lending Was to Housing?
• Japan Is Making A Bet It Can’t Win
• The Bank of Japan must crush all resistance, and will do so
• MAULDIN: Japan Is On The Brink Of Disaster

Freedom of the press is one of the biggest tenets of democracy. Media may go overboard at times but no one can deny that it is playing a crucial role in exposing the darker underbelly of Indian bureaucratism and politics today. But not Prasar Bharati, the national public broadcaster of India behind Doordarshan (DD) and All India Radio (AIR) and government stooge.

Even as the public broadcaster faces ridicule for its incompetence, outdated journalism and bureaucratic red tape, the government plans to pump in funds amounting to ₹21.80 billion to turnaround the sharp decline of the “autonomous” body. It’s just another sinkhole for taxpayer’s money, if you ask me.

Like various other government projects, Prasar Bharati is suffering from the consequences of bureaucratic mismanagement, lack of leadership, and political intervention. Prasar Bharati’s Board chairperson Mrinal Pande was openly vocal about it  at the inaugural meet of the Sam Pitroda expert committee set up to revive Prasar Bharati. He slammed the Ministry of Information & Broadcasting (I&B), blaming “intricate circles of bureaucratic power” for the broadcaster’s current state.

Didn’t Ajay Shukla, hired from a private TV channel to head DD’s primetime program News Night quit the very day after he subjected BJP’s Tarun Vijay to some hard questions? Is this the “autonomy” the government wants to protect? If so, isn’t this corruption of media?

Minister Manish Tewari admitted that two thirds of the I&B ministry’s budget (almost ₹18.85 billion out of ₹28 billion) goes to Prasar Bharati. The Ministry is the recruiting, disciplinary, and sanctioning authority of the broadcaster and the government is the largest advertizer on DD and AIR. Obviously, the broadcaster cannot bite the very hand that feeds it.

Minister Tewari made no attempt to disguise the government’s intention to leverage Prasar Bharati heavily to generate wide-spread awareness of government schemes for the welfare of people. Nothing wrong with that but will Prasar Bharati have a free hand in picking and choosing subjects? It’s doubtful.

As it is, Prasar Bharati is losing audiences in rural and urban areas where alternative media channels are available, thanks to DTH. That’s not to say that other media channels are top quality but at least they’re on the ball.

Pitroda’s expert committee may make umpteen plans to leverage social media, recruit new talent, and leverage a new business model for Prasar Bharati to become profitable but that’s not going to happen. With the government calling the shots, what are the chances that Prasar Bharati’s prospects will improve? Not unless TRAI’s recommendation is implemented – bar Union and State governments and their owned companies from the business of broadcasting and distributing television channels.

People are not fools. DD and AIR are not losing out because of outdated content alone. They are simply not trusted as reliable sources. Unless Prasar Bharati manages to break out of the government’s stronghold, no amount of funds is going to change its story.

Related articles

• TV owners might have to pay licensing fee
• In Doordarshan, ratings infuse a lease of energy
• Indian public sector to grow on back of modern IT
• A dilemma and debate around relaxing film censorship in India