Sunday, January 9, 2011

Lower Parel Is A Mini-Dubai and We Don't Care What Others Think

It is beautiful to have so many fellow Happionaires wanting to volunteer from all over the world and sharing their experiences over the past years on this wonderful journey we have had. Our inbox has been flooded and we have got hundreds of people interested in volunteering. It proves our belief that generally people are good and desire to do something good. Most people just need to be given an opportunity to do something good, and they will. We want all those who have committed to being Happionaire volunteers by starting their volunteering work immediately! You are going to form a very important part of our movement. All those who have committed to be Knowledge Spreaders do share this message with each and every person you know.

In spite of so much love and support from everyone, I had one individual questioning our views on real estate way back at the peak of the crash. During the Crash, I had stuck my head out and said two major things:

The first that the Crash was a good time to go out and buy certain companies that had assets and the second was that I still believed that real estate was overpriced across most parts of the country and needed to correct.

I was blamed for having stuck my head out and dissuaded this person from buying property. According to this person, he missed the boat as property prices are higher today. He was looking to buy a property for personal use. What a few people fail to realize is that when I speak, I speak from the point of view of an investor and nothing else. I ask myself, “Where will my money work the hardest and do what I want it to do for me?”

During 2008, had you invested the same money in select companies, let us say an Indian Hotels which was even shared very publically in Cash The Crash and say alternatively invested the same in real estate anywhere in the country – ask yourself which would have given you better returns? With Indian hotels you would have easily made over 100%, with much less risk. I would request each one of you to look back and decide for yourself what is right and what is wrong.

Of course Indian Hotels was just a small example, there were many more and there will still be many more. Real estate is a great way to create wealth, no denying that, but you need to be aware about it. It isn’t as easy as just buying just because everyone around you is telling you to buy.

Even as a small child, I used to be interested in learning about money and investing. In those days there was a lot of talk of Japan and its rising power. The Japanese real estate bubble lasted for almost 4-5 years continuously, where at a time the real estate of just Tokyo city was worth several times the GDP of America. Today even after twenty years real estate prices have not risen in Japan.

Indian real estate is not the same as Japan, we still have a long way to go across smaller cities – but in select pockets like let us say a Lower Parel in Mumbai, we can surely see a mini-Dubai in the making. I am saying this because, I have no vested interest. We don’t have developers pasting full front page ads on our blog telling people they need to buy their real estate. A lot of people have wanted and still want to advertise on our blog, but that isn’t something we accept and we never will. Lower Parel was certainly a good buy, but ten years ago when prices were Rs. 2500 a sq ft and everyone had ignored it.

I knew Dubai real estate was a bubble four years before it actually burst. The thing is for a bubble to burst sometimes it can take a few months or sometimes even 4-5 years.

Unfortunately most common people who have not had experience with the practical world of finance and investing, fail to understand what really is happening. Today they panic when after a year or two they see prices being artificially inflated. They feel a sense of helplessness that forces them to take heavy loans and sacrifice their financial future and freedom.

Don’t worry about that small apartment, think about how you can grow your existing wealth so you can have what you truly desire without the burden of debt. Wait for the right time patiently and it will come. When the time is right, it will happen.

If you don’t agree with our message, you are free to leave the Happionaire way. We do not need people who are easily brainwashed by propaganda and can’t think independently for themselves. We want each and every person here to be here because they have an internal desire to be here. They have a voice inside them telling them that they should be here. But I know all those who leave and get carried away by propaganda, will look back five or ten years from today and most certainly come back.

Day traders, futures and options gamblers, currency and commodity speculators and all such people will realize sooner or later that the only person they are getting rich is the broker.

There are lots of things that are hidden from the masses today all over the world. When we meet, I shall share more about such things. The way the forces of Capitalism are working are very incredibly indeed.

Keep learning, having fun and smiling!

Yogesh Chabria

Happionaire

We Need You

20 comments:

Anonymous said...

Yogesh - what do you think about real estate prices in general for whole of Mumbai? Do you think stock market will take breather in near future? Can you think of any catalysts?

NPV said...

You are absolutely right to mention the high preperty prices in various parts of India. But an average individual in India with investible funds looks at real estate as the only option for getting a reasonably higher returns compared to his next best option i.e bank fixed deposits.
With the kind of knowledge required by an individual investor to successfully invest in stocks it seems to him that it easier to invest in real estate (since he will invest and hold it for years together). Ideally, asset allocation is a very individual decision and one that should be taken after doing a careful analysis of one's situation.

Also, though I know and appreciate that you are a true long term investor but there are people who have made money trading in stocks too. One famous trader is Mr Rakesh Jhunjunwala. I submit that by gaining knowledge one can be a good trader too. Thus, you are absolutely right that acquiring knowledge is the way ahead.

Viral Rajnikant Dholakia said...

Yogesh,

You might be right when you say that the realty prices could be inflated in the buzzing Lower Parel area of Mumbai.

In fact, real-estate prices in Mumbai has hardly shown any signs of cooling down except for few quarters during the 2008-crash.

But, a striking aspect that emerges in my mind is that the stock prices of realty developers have been the biggest under-performers on the Indian bourses.

You name it... IBREALEST, HDIL or DLF; the stock prices of all the major realty players are depressed and way off from their peaks. Yes, huge debt burden is certainly adding to their woes, but that might gradually come down as these companies dilute further equity to free up the debt on their books.

Further, the recent bribe-for-loans scam has added up to the apathy of the resl-estate sector making investors further jittery about the prospects of this hard-core industry.

High inflation and impending fear of rate hike by the RBI has not been something to cheer about for this ailing sector, for sure.

To cut it short, though the industry seems in a good shape, the stock prices of the realty stocks are going dirt cheap with respect to the sector's historical valuations. The stage is set where we can say that this sector can be termed as a classical contrarion play in 2011.

The disconnect between the realty stocks and the real business of the developers has widened with every surge in Sensex and Nifty.

Sooner rather than later, this sector should be up for sharp re-rating as most of these companies get ready to fork out above-expectation results in next few quarterly performances.

How much do you agree with me, Mr Yogesh?

Anonymous said...

Is it time to start buying slowly, or wait for the market to fall further?
Please advice.

Samant said...

Yogesh Bhai (Calling u bhai so that Mumbai builder's 'Friends' dont come behind u ;) ),

Did u plant this story in Economic Times :)
Kudos !!

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/owed-rs6000-crore-banks-cut-off-funds-to-mumbai-builders/articleshow/7309467.cms

Anonymous said...

Thank you for developing this website. The stories here are worth reading many times over in order to refresh us time and time again to do good and positive things and inspire or influence others to do the same.

Anonymous said...

Wow - this is the best article i’ve read in ages!

Anonymous said...

What a great idea to let us in this whole procedure.

Anonymous said...

Well, I was totally blown away with that. I told my wife and she agreed. I would like to hear whatever else you have on this. Excellent!

DPM said...

Yogesh Bhai,
Gold is falling Rapidly now. What should we do now.

Thanks
DPM

Ravi P said...

Hello Happionaires,

I hope everyone is smiling as good times are near.

I would like to share a company with you. Its IPO came in 2007 to list at around Rs 700 and its share price rose to Rs. 1000+ soon.

Recently around October'10 it is declared that the profits are low and debts are high (around 600 cr.).

The company has 1000 locations and the current share price as of today is just 37 Rs with market cap just above 110 crores.

If I evaluate just one store at 1 Cr. to be conservative with land, brand, inventory, I see the company worth of 900 to 1000 cr. Let me subtract the debt of 600 cr, again the net worth is around 400 cr. I can buy the whole co in 110 crores - don't we want to buy this value of remaining 300 cr.

That is how stock markets are - people are willing to buy it when it is around 1000 but not when it is lingering around at 37.

May be it is another Satyam in formation, the company is in tough times but it is not written anywhere that it will be in future as well.

I have started buying in small lots, May be it will come down in future but that gives us a further better opportunity to buy more. I would suggest only invest the amount that you are willing to loose and forget about it. :)

Do you want to do research now? The company is very known to all of us and am sure you might have seen it or purchased from it in your city as well.

Anonymous said...

Ravi
are you talking about vishal retail?
if yes, i would refrain from it. your logic is good.(buy beaten down stocks). but it should have some future. i dont see this here. look at their financial results.

Ravi P said...

Dear Anonymous,

No, I am not talking about Vishal Retail.

A. The stock price is in 20s not in 30s.
B. I would compare Vishal Retail to Subhiksha.
C. They do not have 1000 locations. (may be less/more but not 1000).
D. The Book value is in negative for Vishal Retail. The company I am talking about has a nice 100+ book value. So as per books as well valuations are strong.

Enough of hints now. Any more guesses?

Think more, though you are in right direction.

Anonymous said...

i got that now Ravi!. wont reveal it as you want people do the homework :-). i didn't find it good. looks like everything inflated. i see it going to single digits.

btw good thinking by you. but i am afraid its a wrong pick. anyways hope u get good returns from it. who knows ? there might be a turnaround.?

DPM said...

Dear Ravi,
Please read the link below. I think you can see why the stock is so cheap

http://www.livemint.com/2011/01/20215647/Ascent-Capital-exits-from-Kout.html?atype=tp.

Bye

Ravi P said...

Dear DPM and Anonymous,

Thank you for sharing the link - I had already seen it since I have been doing bit of research before investing as well.

There are two sides of it:
a. You can be pessimist and forget about it.
b. You can be optimist and invest on the downside.

I would give you a recent example - See what happened with Lupin, Titan. These issues were also there low margins, high debts, losses but we all know what happened with these companies. They have been gold mine. Titan was once sold for barely 110 cr market cap.

I agree at present they are in debt, but even after subtracting the debt the valuations are still cheap.

Now imagine suddenly a big HNI or fund comes and say we are taking over this company. All of sudden the valuations will start looking attractive and the same stock then rolls new high and becomes gem for every one. Every other analyst on financial channels will say what a good business model, India story is intact.

I calculate it simply - If you are getting 1000 stores furnished with full inventory in it in just 110 crores, I find it cheap.

You can ignore if you want to. Recently they are in talks with some companies taking over. You never know - who know what is there in next few months coming ahead of us.

Ravi P said...

Plus I would like to say one thing it is important that you buy but at what price.

Ascent must have paid a high price and bought it at expensive valuations. It leaves me with option to grab at cheaper valuations. Choice is yours...

Samant said...

hi Ravi ,

Nice to see you sharing your analysis details here...

i wish you the best on this find !

I too am a little skeptical as others considering the high debt and current conditions.
But your logic is worth a try.

Have you analyzed Subex on the similar lines ..considering that its already on the path to recovery ?

Thanks
Samant

Ravi P said...

Hi Samant,

I agree with you as well that there are high debts and it is absolutely fine to be skeptical since we don't know what is going to happen even in next few seconds.

But what we can do here is try with small bits - 100/200 shares hardly 7000 rs. But that gives you the opportunity to ride on the boat. If it moves up and recovers a bit in coming months, you can be sure you are on right track. Otherwise, you can bear the little loss - max will be 7000 in our case. I already mentioned you should only invest the amount that you're willing to loose. Be Optimist!! :)

I haven't looked at Subex but will certainly do!!

PS: Just a small disclaimer, I haven't invested heavily - do it on your own risk!! I like to keep my options open by doing systematic investing by investing in small bits. If you want to invest x, split it into x/10, and then invest systematically.

Roopal said...

Hi Yogesh, I am unable to get a response from info@happionaire.com. Can anyone please let me know how can I access the reports at roopalkjain@hotmail.com