2018 Review

What went good, what was bad – Let’s welcome 2019. A 2018 Review of learning & lessons – Through Alphabets.

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A Asset Liability Mis-match (ALM) – New Word

Yes Institution too did what “poor joe” does. Earn below what you need to pay. Poor Joe does it by not understanding inflation, and institution did it by not understanding the interest burden. They borrowed for 3 to 5 years and lent in form of loans for 10-20 years. How will they pay to the person asking his money after 5 years if new money does not come? A super duper Ponzi scheme. Result – Genuine home buyers are not getting loans disbursed!

B Bitcoin – The “Global Greed Fiasco”

No 2018 Review can be complete without mentioning Bitcoins. Bitcoin to the tulip trade of the 1600s – Same fate. After trading at levels of more than $19000/bitcoin in 2017, it traded around $4000 at the beginning of December. And, many in India called me “F” Conservative when I wrote – Bitcoins do not qualify as an asset so no allocation- “under my watch”. Remarkable example – How the entire world came together – with their GREED and inflated a superbubble. Never Witnessed before – Only Read, but now seen with naked eyes.

C Crude Oil

Brent Crude oil had a very interesting year. It kicked off the year at $66.50 per barrel, then rose up to above $85/ per barrel, & fall back to $59 by early December.

Many say Modi’s fate is controlling international crude prices. Before someone says “Modi Tael Chor Hai” (PM is an Oil Scammer) – let me just tell what I felt. We import 90% of oil requirement and still sell more than 2 crores vehicles a year. We are just building and selling future – Iron Junkyard. I just cannot wait to see Electric Cars in India.

D Diversification

2018 reminded us yet again of the importance of a well-diversified portfolio. Investors had a tough time with both Equity & Debt, as well as property. Debt NAVs corrected – Blowing the bluff that Debt MFs are equivalent to Fixed Deposits. Very well deserved lessons for a seller who SELL for greed and buyers who FALL for greed.

E Elections

My own state saw a washout. Elections are equivalent to wars now with the only difference – your enemy is your own countrymen.

Investor saw elections as a reason to invest or not. Any reason which makes them forget their own goals, own strengths is worth talking and understanding. Really it is time we check elections or they will be a headache in our country which thrives on emotions.

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F Finance Ministry

For all bad reasons this time “finance ministry” took the blame. Whether it was RBI conflicting views or Raffel or markets correcting. He proved GST was good Demo will be good too. Still, everybody says PMO is efficient FM is not. Spare the guy – he is Cinderella of the ministries. He just needs to lose a shoe.

G GDP & Growth

This is what you see only thing CONSISTENT. The change India is undergoing and the pace of change – Just remarkable. There have been a few disruptions already (Jio, Jandhan, Amazon, Aadhar etc), there will be 1000 at least more in the coming 1000 weeks. Forget 7% or IMF figures- Open your eyes and just look around.

H House Prices & Properties

House prices if high makes everyone happy. An amazing kind of sensex in mind. 2018 saw no revival, so gloominess will still prevail in 2019 too.

I IL&FS Fall

Only 2 public auctions of Luxury Cars & household item caught ears. Imran Khan seeling cars buffaloes of Nawaz Shariff & New Management selling JAGS & MERCS acquired by old management of IL&FS. A name – which means around 350 companies in one, with huge land, office spaces, and business. The failure led jitters to MFs and stocks. Why buffet says “ a bad business with honest management is worth looking at than a good business with bad management.”

J Junk Loans – Junk Future

Forget election promises, but this year 2019, its start of 2 new thoughts:

Should you be OK if you are not serious paying back your loan? Farmers make 60%+ of our countries occupation by number and they have been told not to pay. So someone can show mercy at you too?
Income Taxpayers, need to think – is this the way you like to be treated? Pay someone else loans? The whole transaction seems

K Know your limits

A comfortable retirement remains a huge concern for many. Debt means low or fewer returns, Equity means sleepless nights. Risk Assesment – Never Heard of! Asset Allocation- Only Theory!

L LTCG introduction

Equity party over? – We say we never thought we were having a party!

Long Term Capital Gain issue slowed the pace and increased questions especially in the mind of HNIs (one who can pay the tax). ULIPs seller smiled and pounced the opportunity. LTCG never was or should have been the reason to invest in equity. It was a perk, pulled back.

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M MF Reclassification

MFs were keen on “becoming holy”. SEBI made it sure that they clean the system and start by knowing what they are working on. Mutual Funds have become a household name now. MF Sahi Hai campaign helped and so the internal things like Reclassification & Rationalization.

N Neerav Modi

A man small in height shook the second largest Public Sector bank in India- PNB. Due to his wrongdoing now PNB is selling its HQ to maintain liquidity. Still, out of sight the man and the scam was like a jolt on many banks.

Due to one or the other reason ICICI Bank, Yes Bank, Axis Bank, KMB all had a rough 2018. Important lesson. Trust comes before money.

O Optimism

The year had some very positive moments. I am not talking about hi-profile weddings!

Do you remember how the world came together to extract the underwater trapped soccer boys in Thailand?

Best moments when the boys saw the daylight again. Hope is what keeps us going and these moments uphold the faith.

P Prime lending rate – not a benchmark now

Another milestone is Loans rates getting attached to an external benchmark. RBI to Banks- Now play the interest rate game on your balance sheets.

For borrowers, nothing better than this exists in developed markets too.

Q Quantitative easing- FED Rate

More than our rates, we were watching when Fed Reserve (RBI equivalent for the USA) will increase rates. Trump wanted no increase but FED had announced 5 cuts. More than economy, it was a family –feud now. Twitter handle of POTUS & FED was the busy entire year. Trump eventually fired a few to say –he is the king.

R Rupee fall

Felt bad to look at the harmless dove rupee chased by vultures. Many said, “ ye to crude ki Mahima hai” (its all because of crude oil price volatility), some blamed NRIs. Someone pulled out, that entire world’s currencies are affected, Rupee is “comparatively” a Shaktiman.

Lesson: International Factors can be bad for an all Indian portfolio. Be ready for a connected world.

S SEBI

When markets are volatile, they work overtime. Their vigilance, the guiding hand was seen and felt all over the year. They came out with many measures for the future. Equity investors will be benefitted. Equity MF investors got low expense ratio – Kudos!

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T Trump & Trade-war

As always, Donald Trump definitely managed to outsmart global leaders during 2018. Whether you like or not, he simply still cannot be ignored. He was busy fighting Russians, his own staff, his wife (oops), German Chancellor, France’s PM, Canadian PM, Chinese PM, – the famous trade war. A great case for future researchers.

U Urjit Patel & Party

Something does not feel right when you see Urijit Patel, Raghuram Rajan, Arvind Subramaniam and many more acquire – SILENCE. We will be good in the future, but it feels good when you are in safe & trusted hands. Why do we have to land every time and change pilot? What’s bothering them?

V Volatility

You: How will be 2019?

Financial Advisor: Same like 2018… Volatile.

Elections again in the first half, year-end for corporates and many reasons still not in sight. Roller coaster coaching classes – The next best business.

W Why me?

Because you still go knowingly or unknowing, to place where you will die!

What??

Ha ha… this is the title of a famous book “ All I Want To Know Is Where I’m Going To Die So I’ll Never Go There, by Peter Bevelin.

You know if you don’t plan you will be a mess. If you do not give time to your investments you will have a bad time. If you don’t act – you will be nowhere near the responsibilities, the goals & dreams. Yet you ignore. Hope 2019 will be a year of turn around and reverse walk.