Sunday, May 17, 2009

Politics and The Economy - Does It Really Matter?

Once upon there was a seed, in the beginning it needed people to water it. Later when it became a small bush, it needed people to protect it from animals and pests. It always hoped that it had someone to take care of it and nurture it. In the beginning it was small and weak, sometimes a few people would pluck leaves and hurt it and at other times animals bit leaves, but in spite of all these challenges it survived and grew. And over time it grew into a strong tree that had roots deep into the ground. It no longer needed anybody to water it or to protect it from animals. It was mighty strong and outlived many of the people who had hurt it and harmed it in the beginning. 

All of us are like that seed, since decades we have depended on our politicians and government to provide us things. Three decades ago our youth, needed to knock on several doors to get a simple job in a public sector company. We needed to bow down in front of the bureaucratic machinery for every little thing we needed – right from jobs to phone lines to licenses to start a business. 

But today things are very different. We just like that seed are on the path to growth and thankfully do not need to plead and beg in front of the government for everything. That is one of the main reasons, that I feel that no matter who wins or loses elections, it doesn’t really matter when we look at the larger picture in India. We are hard working people, and in spite of all challenges we do end up getting our work done and moving ahead. Look at Dhirubhai Ambani and how he flourished in spite of the entire bureaucratic machinery trying to pull him down. 

Today we have the power to bring about change and we all know that we can never depend on anyone else to do what we want. Look back in life and I am sure you will have many instances, when you were the single most important person in your own life. Our tree needs to becoming stronger and bigger. 

There are talks on business channels about how markets will rally just because a particular party has got majority vote. It might be nice that the Left is no going to form the government, however there is a lot more that the government needs to do. Security and punishing terrorists is one thing that is extremely important. 

Yes, they might be a stock market rally – but that still doesn’t mean that everyone should jump in blindly with their money. America still has very grave problems, and when those come out India too will see some short term corrections – those will be excellent times to buy more. I see a few more Banks going down in America and that will send a couple of shock waves. I am an eternal optimist on India for valid reasons, but politicians and political parties aren’t the reason behind my optimism. 

I know a few of you might be slightly confused and thinking “Will we get left out if this market rallies?”, “Let us jump in and put money.” I once again repeat as I have in the past, never indulge in such things. People Who Create Wealth Do Things That Others Don’t. Stop watching the business channel continuously and being bombarded with all sorts of views – it will not help you create wealth. It will just blind you from making logical decisions. You are not sheep, who will simply follow the herd but an intelligent Happionaire. 

Stay balanced and don’t forget smiling! 

Yogesh Chabria


Anonymous said...

Thanks Yogesh for publishing this article. If not for this article, I would have bought today.

I was actually having patience and not buying in the current rally (past 1-2 months). But after the elections results, and reading that markets would rally a 1000 pts in a day and 15-16 K sensex is just round the corner. I thought I would be left out. I was really confused.

I was hoping you post an article and guide us. Thank God you did.

God bless you !


Vikram Jain said...

Thanks..even i was feeling like I have missed a chance ....last month i was selling equity continously in smal parts to book profits bcoz I was not hoping of India getting a stable govt..but anywayz i have lot to sell so will sell as markets rises..

Sandesh Kamble said...

Hi Yogesh,
Thanks for this post right on time. Even I was thinking to buy something in the morning trade and sell it by evening due to expected huge rally.
Please let me know if we can book profits in some large cap and mid cap stocks tomorrow or wait for some more time.

Sathya said...

Hi Yogesh,

Can you in ur won style.. post an articcle or guide me/us on how to chose what stock or company to pick to invest in? why and how?


Dev said...

Actually I thought of buying something on monday but couldnt due to the rush!!

Now booked some profits in some companies.

Some sectors like Insurance,Aviation,Infra are booming just due to the hope in Govt and speculation. Book profits if you get an extra ordinary rally on one day.

After all, left is not the only reason for stopping reforms. Once the honeymoon is over and govt is slower in implementation, combined with bad news from US (e.g, some big automobile companies go bankrupt, massive printing of US dollar etc), WE MUST get these stocks cheaper.

What is your view?

The Happionaire™ Blog said...

Fellow Happionaire - Life is filled with opportunity. When it comes to markets, don't look at Sensex levels for investing. There will always be individual companies that are cheap buys and even if Sensex is at 8,000 levels there will be individuals stocks that are expensive.

Vikram, Sandesh, Dev - You can use the rally to exit stocks where decent profits have been made. There have been companies that have rewarded me over 80%-90% in the past few months. This is satisfactory for me, because I know that markets will go back down.

In US things are getting worse and big investors extremely close to me are all getting into gold. The Crash is still not over and this means the opportunity still exists.

Sathya, I have shared such a thing in detailed manner in Cash The Crash. In fact the company I shared was one where I was privately invested. Since the release of the book, it has rallied over 50% I think.

Keep smiling and have a great weekend!

Yogesh Chabria