After our last post on Dubai, a lot of fellow Happionaires have been asking the reasons I believe a Crash is yet to come and I can understand how a few might be getting impatient. I have explained it completely in Happionaire's Cash The Crash and in our previous posts. I have also declared my position on Gold long back. In the coming days as I get time, I will try to explain more here.
Recently a friend of mine had invested with me at the peak of the stock market crash. He booked profits of over 200% in less than a year and asked me if he could invest part of it in India’s biggest bubble. I started laughing and told him – he might as well gamble his money away at a casino.
I am an eternal optimist when it comes to India’s growth and the power of the Indian mind. Our stock markets have rewarded anyone who has believed in the power of knowledge and invested with conviction. However India has one of the largest bubbles that will one day burst. When it bursts it will make a lot of people very happy, unless of course you are already heavily invested in the bubble and have taken huge debts to further fuel the bubble. Luckily since childhood I was taught that most of the times Debt is Death.
I’m sure most of you would have already guessed what bubble I am talking about. Anyone living in India, would be able to see the bubble growing bigger and bigger each day around them. You would have sensed how prices have constantly gone up in the past few years – sometimes quadrupling within no time – without any real fundamentals.
The bubble has been fuelled by cheap money from banks, junk IPOs and a lot of PE (Parallel Economy) money or what is also called as ‘Black Money’. Because of all this the common man is unable to afford one of the basic necessities of life. This was the same thing that happened in places like America, Dubai and even Japan almost two decades ago. The reasons might be different, but the money all chased a single asset class that caused Empires to collapse.
India is soon going to face the same situation and we can see the bubble bursting by as much as 70% in some parts of the country. There are a series of IPOs lined up; all meant to make sure the bubble doesn’t burst anytime soon. Many Mutual Funds might divert the money of innocent investors to fuel this bubble and sometimes large financial institutions also do the same. As a retail investor, I would immediately pull out my money from such Mutual Funds which don’t really respect my money. I would ensure that everybody around me is educated about the biggest bubble India has ever seen – so at least they don’t get trapped and carried away.
When companies come out with IPOs only to repay debt, you know there is something fundamentally wrong. Almost all the IPOs that came out in the past two years in this sector have caused investors to lose immense wealth – sometimes as much as 90%.
Stock markets always react much quicker than things happening in the real world. As intelligent investors, it is our moral duty and dharma to follow what is happening around us and take logical actions based on that.
If someone asks you Rs. 1 crore for a small car which costs only Rs. 5 lakhs to manufacture, will you pay it? That is how gigantic India’s biggest bubble really is. Things that cost only Rs. 5-10 lakhs to make are sold for Rs.1 - Rs. 2 crores. Common people get trapped into taking EMIs and end up suffering for life. Luckily now the masses have realized and have stopped making such mistakes.
Once the IPOs fail – we will see this pack of cards collapsing. I don’t need to tell you what India’s biggest bubble is, because sub-consciously I’m sure you already know what I am talking about. Without me even mentioning it, your mind already gave you the answer. We all have universal intelligence within us, and when that starts working no force can stop it. Believe in it, and don’t get carried away by what people around you say.
Keep smiling and make the most of now!