I find it strange and amusing when people behave in such a shocked way when they hear about what is happening in Dubai. Anybody who has visited Dubai can see huge towers built and still being built, all lying vacant. You don’t have to be a rocket scientist or economic PHD to figure out that when properties are being built non-stop in spite of the earlier ones being empty that prices have to crash. And the bubble has to burst. Dubai isn’t really that bad, compared to a few other countries and supposedly world class institutions.
Everyone on the inside knew what is going to happen there – and now everyone on the inside already knows what is going to happen in the coming months with some major European and American financial institutions. The Swiss, Germans and British have a lot to lose in Dubai. A lot of fellow Happionaires have been asking me if they should exit Gold – the real global crash is yet to come and the real rally in Gold is yet to be realized. Have patience and Laxmi will reward you. Gold will be used to replace cash, but the real spurt in returns will come for those who pick up beaten down assets and dirt cheap prices.
The reason I shared gold so openly quite sometime back is because it is a commodity that cannot easily be controlled in terms of prices. My meetings with some of the worlds most powerful and secretive investors, had led me to invest in Gold. The real rise in Gold is yet to come and the real reasons will soon be revealed to the masses. Once that is revealed, people will be running and will enter a buying frenzy for it. Just like Gold even Silver will surprise lots of people.
Gold returns will be less in rupee terms compared to dollar terms, but still will be sizeable. The biggest returns will come to all those who will pick up undervalued companies as the Sensex crashes because of the global turmoil.
I rarely share individual stocks because a small company’s stock that is undervalued can easily rally upward if I share it with a larger audience – causing me to miss out the opportunity, but that is not the case with Gold.
Imagine what was to happen, if tomorrow America declared that it is unable to pay trillions of dollars to its creditors? When a small place like Dubai with only USD 60 or 80 billion can cause this type of panic, imagine what will happen when large skeletons come out of the cupboard?
Today not even China offers a worthwhile investment opportunity and the only oasis of real long term value and growth is India. I have friends who have shut down their manufacturing businesses in China and returned to India. The people doing business on the streets of India, China, Dubai and America always know the reality much before analysts on TV.
In India only thing that you need to worry about is real estate. Stay as far away as you can from property, because at this stage it will cause a lot of pain. Forget and ignore all real estate IPOs, debt floated by realty companies and buying commercial or residential real estate. All it needs is a small pin – that will cause the entire balloon too burst.
I’m also staying away from Indian companies that are trying to acquire assets aboard – specially by taking heavy debt. The opportunity is too huge in India, to worry about trying to enter saturated markets. Acquisitions in the West, Japan or even China made today in no way can reward investors if the same money is invested in India. Today by the grace of God and destiny, we have come to have the world’s most stable and secure financial system – and surprisingly an excellent environment for business growth, if you know how the system works.
The next time a foreign rating agency tells you emerging markets like India are risky, we should all laugh at their good sense of humor and ask a simple question: How many banks went bust in America? How many banks went bust in India?
How many people remember that not to long back companies like SAIL were quoting at Rs. 7, and went on to cross Rs. 300? At Rs.7 people were critical of it because it was an "Indian" government company that had ‘issues’ and the same people were surprisingly chasing it when it crossed Rs. 300. India has created real wealth for people who have had faith and conviction backed by knowledge.
Lord Krishna had told Arjuna that in battle, we are to have no fear and do our dharma. As investors it is our dharma to create wealth and make the most of opportunities. The truth is that the best of times for India are just about to begin. The true potential of India is yet to be realized – and when God is on your side no force can stop you. But then how many people will once again miss this opportunity?
Keep smiling and having fun!