Today we were discussing on the site InvestorsAreIdiots.com. The name was interesting.
We took the following article from their home page:
We question the following facts written in the article:
- Gold was a Bubble & it Bursted
- Manappuram, Muthoot lost most of their capitalization
- Equity Markets are down currently
- Property Market will burst soon (prediction)
Our view on their Gold Statements:
- Why they did not appeared before the Gold Burst?
- Gold does not have a Intrinsic Value or Book Value associated as Gold does not earn money like a company! So the price is determined by demand / supply plus other factors like currency, inflation etc.
- Can they show the real price of Gold? Is it 2000? Is it 4000?
Our view on Gold Loan companies:
The companies earned more profits as they were giving loans on 90% gold value. This made them reap huge profits & thus share prices went high & so capitalization. So the boon earned is much more than the current bust.
Plus, looking into their fundamentals, many of them are quoting below Book Value, they lost 70% of their Peak Value. Gold seems to be saturating a the levels of 2250 (ETF). One with medium-risk appetite can buy the gold loan company shares in a diversified manner.
How a multi-bagger is possible?
When you buy them at high or low?
Our view on Equity Markets are down:
We would say it is pretty wrong. The SENSEX is quoting around 19000, which is closer to the peak of 21000 during 2008. Plus, the PE Ratio of SENSEX & NIFTY companies have gained internal value, so the market can go up to 24000 levels in a bull run.
We believe the economy is in recovering mode & the growth will continue for at least 2016 & SENSEX reaching 24000 could be a reality!
The recommended strategy is to allocate 25% of savings in value & growth stocks. One can exit them when the NIFTY PE Ratio peaks above 25. (Currently it is 18)
Can they show the grounds for saying Equity Markets are down?
Property Market will bust soon:
We are not experts there, but surely we can say one thing. The Capital-Rent ratio of property is 5%. It means a 1 Lakh yearly rent generating property should not cost more than 20-25 Lakhs.
But there are deviations where expected-boons-around-location like future parks, malls, bridges – then one may pay higher based on the returns expectation.
Once this Capital-Rent Ratio deviates very high, there could be burst, we cannot see than in near 1-2 years.
Can they show the real factors Why Property Market will crash?
Our biggest Question
Why they did not mention to buy Gold?
Simple law of investing, we have to buy things when Price is Low & sell at high. Gold is such a commodity that cannot be created easily, it comes from crust of earth, takes years to make Gold in natural form. So countries, institutions use Gold as an Investment, Hedging mechanism to protect their value.
As Gold is down by 30%, is it an opportunity to buy / dump?
We believe more buying of gold will come around 2250 levels of Gold ETF.
It is a painful fact that, we have very less honest leaders in India. Investors wanted to secure themselves from Future Uncertainty. But the existing investor advisers will Perplex them.
We can see analysts over the TV asking to buy shares even when they are out of Growth Value. When the market crashes, they will come out and say “See.. we have told you to sell.. Right?” 🙂
Seems like a Bear Mentality! Expecting everything to Crash, without seeing the positive sides..
Surely, they know that Investors are Idiots, so perplex them & use them!
They did not provided a place to comment, so we place the comments here. We are honest & wanted to lead the people right way.