Hi,

So another year is ready to become history. In many ways this year would be
remembered as historical indeed! An eventful year!

The year 2008, started with euphoria of Bull Run, soon became the last leg of
Bull Run. What started as a correction in bull market became a full fledged bear
market, in fact one of the worst bear market, as far as price fall and valuations
are concerned. Even the most pessimists did not expect the market to go down
into 4-digits.
Investment banks, e.g. Leyman, went belly open, giving financial tsunami all over
world. Placements at the B-schools, IIMs included, suffered. In fact the financial
vertical, the highest paying jobs for campus placements, went into tailspin.
The inflation was overpowered. But only at cost of growth. The penalty was so
heavy so that world over, central banks, including the Fed and our own RBI,
opened flood gates of liquidity. But till date even this flooding did not make any
liquidity going into the financial market.
Starting with the subprime, the US, and later Indian, realty collapsed. Most of real
estate companies have lost more than 80-90% of their share values.
No one expected that ‘Kyoki Saas bhi…’ would go off air. With Star-Ekta break-
up, the dynamics of TV soaps has been altered to end the monopoly of Star Plus.
Reality shows became new reality.
Rival between ‘the’ brothers continued. The R&D cell of a major pan-Indian
telecom operator divided vertically, triggering exodus.
Credit situation became so worse that getting telecom license/ 2G spectrum is
liability, and Unitech has paid price for going into this business.
‘Joining bonus’, ‘employee focused’, ‘innovative’ were replaced by ‘Layoffs’, ‘belt
tightening’, ‘cost cutting’ etc.
And very recently, the voters showed more responsible behavior in polling by
voting on development saga instead of caste/ religion etc. But leaders and
political parties continue to change sides to remain in power. Congress in J&K
and Devgaudas in Karnataka.
Thickness of Delhi times and other supplements reduced, as the advertisements
shrank.
The crude oil, after touching 147 dollar a barrel, burst. Now at near 40 marks.
Other commodities’ stories are not very different.

But as they say, there is another face of coin.

Stock valuations are cheap, and, to some extent touch mouth watering levels
some fortunate days. Believe me, it’s once in five years offer and may not be
available in 2010 onwards.
India will be one of the least affected country and will become stronger (in
relative term) after this recession.
Hopefully, third front will be kept at bay in the coming general election. But if this
is not the case, the markets will extent its losses in huge amount.
Prices of metal/ crude etc. has corrected so services economy like India will be in
better position, as far as inflation is concerned.
There is no sign of demand softening in the rural areas, as 2-3 good monsoons
has increased the purchasing power of our rural folks.

As after any disaster, the probability of another disaster reduces considerably but
people seldom understand. I will follow this hypothesis and continue to invest at
moderate pace, at each dip of 10 % or more.

Happy New Year 2009!

-Abhi