India - Moonwards & Downwards

While India launched its first moon mission – Chandrayaan 1.A successfully moving moonwards, its markets spiraled downwards as if there was no tomorrow. Bruised and battered the Nifty and Sensex were indeed mauled. After Friday’s brutality Nifty lost 16% during the week and Sensex about 13%. The technicians now believe that India is now in a structural bear market (we heard about a structural bull market in 2007) as against a cyclical bear market, since the correction from the peak is now more than 62% - a key Fibonacci ratio. While the climb was strenuous the fall has been swift.



Foreign Institutional Investors (FIIs) considered key players in the rise have now withdrawn about USD 21bn. year to date. It is estimated that about USD40bn. was invested through secondary market in the 3 years starting 2005. The overall investment of FIIs is estimated at USD80bn. The year 2007 saw the maximum inflow of about USD17bn. It is estimated that the market cap at January peaks would have been about USD150bn. Since market has fallen by about 60% from the peak the market cap of FII holding has probably fallen by about USD90bn. which means that current market cap is aboutUSD60bn.plus USD19bn. already taken out i.e. USD79bn. The money that essentially will look to exit is the hot or leveraged variety, which would probably have come in the last 1 to 2 years of the boom and would be in the region of USD20bn. After adjusting for market cap another USD 4 to 5bn. is likely to move out. The fall has come about despite the domestic institutions (mutual funds and insurance cos.) pumping in about USD15bn. year to date. Talk about impact costs!


Here is the catch. While it is unlikely that foreign investors, given the current international environment are going to come back in a hurry, the local investors who pumped in substantial amounts as the market was falling have also seen major wealth erosion. Additionally the liquidity crises which the mutual fund faced with redemption payments even in liquid funds/debt funds delayed or not paid in full has seen a lot of faith erode. Corporates which contribute almost 60% of the mutual fund indutry corpus were at the receiving end as bank sources dried and they could not redeem their investments. This was because many debt funds were invested in unquoted papers of real estate and Non-Banking Finance Companies (NBFC). It will take a long time for trust to come back.


The money market became so tight that call rates were up at 23 to 25% at its peak. This was essentially caused by RBI supplying dollar to the dollar starved banks and their overseas branches, for oil imports and FII redemptions, thereby sucking large amount of rupee, leading to a major crash. It was a very dicey situation that the RBI faced where the need to supply dollars had to be balanced with how much it could let rupee depreciate without putting upward pressure on inflation. It was saved by drastically falling oil and other commodities. Otherwise the damage to rupee would have been much more. To the credit of RBI it increased the supply of rupee by almost USD20bn. by slashing the CRR (cash reserve ratio of banks – money to be kept with RBI as percentage of their demand and time deposits) from 9% to 6.5%. It also provided a liquidity window to mutual funds to the extent of USD4bn. to tide over the short term liquidity problem. It eased the external commercial borrowing norms, which was a cosmetic move as there is hardly any worthwhile liquidity internationally. The RBI also reduced the Repo rate by 1% more as a confidence building measure. The call rates after these actions are now below the Repo rates or there about.


SEBI (Securities and Exchange Board of India) the market watchdog, also eased the P-Note restriction that it had imposed on FII which to some extent saved forced selling but got a lot of flak due to its very flippant approach to policy issues. Further it notified the FIIs that they cannot short the market by borrowing stocks from other FIIs overseas. While this was to stop short sales through this route, the logic proposed was that the local investors do not yet have such an effective stock lending mechanism (stocks can be borrowed only for 7 days) and hence does not provide a level playing field.


In its Credit Policy announcement on Friday RBI did not announce any new measure as it stated that it wanted to see how the proactive measures taken pan out. It gave its assurance to the market that if necessary further policy tools would be used. It however felt that credit growth and money supply are still on the higher side and it would closely watch the inflationary pressures. This is stark contrast to the international markets where the money supply has gone stand still and but is now showing some sighs of easing. The fact that the Indian banks are closely regulated and supervised, a majority of them government owned (as major share holders) have indeed helped. This is not to say that the sector will not face any problems. Some of the aggressive private sector banks are expected to come out with negative news albeit they are in a denial mode right now. Even some private sector insurance companies which were overly active in the market during the heydays are expected to report negative surprises.


Rupee is expected to be under more pressure as external debt of about USD89bn.is set to mature by July 2009. This is 40% OF India’s total external debt.


So while the depositors will be backstopped the investors have some more suffering and pain to go through. A number of issues point towards this:

1. Corporate defaults especially from the real estate and NBFCs are expected. Some big names may be involved specially those who had leveraged themselves very highly to play the land bank game. Not only the land prices have fallen but the current projects are seeing a major slowdown. To some extent last week’s action has factored this in.
2. Consumer finance off-take has shrunk rapidly with high interest rates. On the existing book the recovery is going to be a challenge for banks. The shrinkage has also come because of this concern.
3. The automobile industry – two wheelers, commercial vehicles, ancillaries etc. have been under pressure for the last 24 months. While the input costs may come down with the commodity prices easing, the appetite of banks to lend to this sector directly or indirectly through NBFCs in the current environment will reduce.
4. Housing finance companies have reasonable chunk of their assets in the builder loans category. With many of these builders under cash flow pressure their loan servicing may not be as desired and defaults are possible.
5. Many of the industries were in a major investment phase and some had just completed expansions. These companies are going to face tremendous pressure in completing the projects and where completed in utilizing the capacities. Cash flows to service debts are also going to under pressure.
6. Banks have been told by RBI to restructure the SME (Small & Medium Industry) repayments of debt clearly indicating the pressure on the banks in recovering from such enterprises. Moreover 40% of such enterprises are exports oriented and are likely to see a considerable slowdown in their business in the coming months putting some more strain on the banks.
7. Companies that raised money by way of FCCBs will be unable to convert these into shares as the stock prices are way below the conversion price. So these will now remain as foreign currency debt in the books of the companies. Many of these are falling due in the next 2 to 3 years. The pressure will be further accentuated by the Rupee depreciation.
8. The Indian IT companies have a substantial part of their business coming from the BFSI (Banking, Finance and Insurance) sector from US & Europe. These companies will carry with them the same uncertainties as the US & European banking and insurance industry. Indecision on IT projects will be high as these institutions judge how much water they are in. Also consolidation at their end will add to this indecision further. Many of the bank captive units will be sold off (a la Citibank) and then to cut costs vendor consolidation is likely to happen in a major way. This means visibility for these IT firms will be lesser as we progress in resolving the current turmoil. Business models in this sector are likely to undergo some major changes.
9. Layoffs have started and in some companies the intention to do so after the current festival season has been announced.
10. The fiscal deficit is likely to be much higher than budgeted given the brunt of fertilizer and oil subsidies, farmer loan waivers and now the current environment which may call for such support in future. The worsening internal debt situation is going to put further pressure on government finances and inflation as it may crowd out the market.

No wonder a newspaper reports say that the sales of anti-depressants have shot up by 30%. So you know where to invest!!

Happy Hunting and a Happy Diwali!!

Finuked…Where are the bunkers??

The markets have been nuked…Finuked to be precise by the FWMD (Financial Weapons of Mass destruction a.k.a derivatives) this week and the brunt were borne by the Asian and European markets which fell by 7 to 12% on Friday. The emerging (or as I heard someone say submerging) markets were hit the hardest with global investors running to the safety of 30 year US Treasury Bonds (which saw an yield as low as 3.7% on Friday) driving down the value of all emerging market currencies… Pound, Euro, Rupee, Real, Zloty, Peso, Forint…you name it. Yen however stood out, moving to a 13 year high against USD, as the carry trade reversed full steam. This led to Nikkei plunging 9.3% given its export oriented economy. The plunge was aided by profit warnings and layoffs. News of UK’s GDP shrinking more than expected, added fuel to the fire as bourses across Europe were seen under tremendous selling pressure. The US futures (S&P500, Dow & NASDAQ) were limit down before the US exchanges opened and worst was feared. However as usually happens, when such extreme expectations build up, the markets behave totally differently and most times exactly the opposite way. Thus while the US markets were down, it was not catastrophic. This many players apparently did not like as they wanted the capitulation to happen. Most should know it never happens when you expect it.

IMF got active with its bailout product as a queue built up with Belarus, Pakistan, Hungary, Ukraine, Serbia etc. after Iceland agreed to an USD2bn. package. The fund as I understand has USD225bn. in assets and can help, but the pace with which the SOS is coming the fund will have its hands full soon. It is now expected that the submerging markets are going to take the baton from the developed world. Analyst fear East Europe is the next place to watch; given the exposure Western European banks have, not forgetting Russia, Turkey, Argentina and South Korea which have their own problems. The emerging bond yields are on a five year high. And given the emerged markets are also submerged/submerging; it is not clear who will help whom!

There are no safe havens or hedges any more. Gold saw a plunge before recovering some what, so did oil despite a 1.5mn. barrel per day cut announced by OPEC. Many hedge fund investors and large pension/life insurance funds seem to have run out of patience and are calling their money back. It’s a race out there as prices are plunging and everybody wants to beat the other to it. The move from the denial to the acceptance mode has been swift and dramatic. It is estimated that the hedge fund industry has lost USD200bn. this year. The slight tightening of the money markets as reflected by Libor helped. Anyway the transaction ticket size as I understand is so small (given the mistrust, uncertainty and the consequent risk aversion) that availability of such liquidity may not be material given the size of redemptions/margin calls.

Reflecting this confused state was CBOE VIX which hit an all-time high of 89.5 but improved to about 79. Now talk of many insurance companies requesting to be included in the bail out is going to add more uncertainty. AIG’s dollar burn rate has been higher than expected and it is reported that more funds may be required than what has been provided for. Questions are being raised about the sufficiency of bail out funds for banks as the imminent deep recession might cause default in the core loan assets (as against treasury holdings). The assets and inventory against which such lending was done would also have fallen in value dramatically and more importantly so swiftly that the banks may not have had the time to assess the level of margin calls to be made on these. This explains the aversion to lend further as the banks need to evaluate the present asset cover to lend further. With demand destruction and falling inventory value the companies may not be easily able to find the cash need to roll on.

So what does an investor do? Streetwise are talking about (after analysis of) dividend yields, book values, cash on book, replacement costs etc. and above all the high fear factor as a good reason to buy. These values in today’s environment are as uncertain as the predicting wind direction a year or two ahead. The market today, as I mentioned in my previous post, is like a cancer patient in ICU (unlike flu, diabetes etc. where known remedies/treatments are available) being treated by world re-known specialists (governments/central banks). It is easy to start treatment for such a critical patient, but ending it never easy. While the main disease itself can spread, as the treatment progress lots of collateral damages happen and then these need to be addressed while progressing with the core treatment. This is tough and the results are not certain. It would be better first to see the patient out of the ICU and then take a view as to how far and how quickly he can progress. So much for market mortality!!

Right now there are no bunkers to this attack. If you are exposed you can do very little. If you did shelter yourself with some foresight (by being in cash), stay there and do not come out. You will require it to ride it out. If you have excess cash – say which can see through a generation – then may be you can take the risk of some exposure – The Warren Buffet Way. If things do workout in the next 3 to 5 years in your favor, you may be able to see another two generations through! For others it is caveat emptor.

Still in the ICU….the global context

One had hoped with all the global specialists the patient might at least be out of the ICU (Intensive Care Unit) and have some basic stability of the vital parameters. Despite what the doctors administered the patient seems to have shown only a marginal improvement. While it is difficult to say if the patient is out of danger, the circulatory system which had totally stopped with the heart hardly pumping, has seen some signs of revival, albeit the heartbeat rate/pulse is far from what can be considered as safe. The money markets appeared to melt slightly with LIBOR (London Inter-bank Offered Rate – the rate at which London banks lend to each other in various currencies) with overnight and three month rates starting to ease off. But they are way off from what can be termed as the official rate as indicated by the Central Bank rates. For instance the current three-month dollar Libor remains well above the U.S. federal funds rate of 1.5%.

This is a patient with not only a heart problem. In fact it has been diagnosed to have blood cancer that has spread too many of its organs – including many vital ones. It therefore required fresh blood infusion to even before other basic treatment could be thought of, or provided. We thus saw blood donation in the form of unlimited dollar loans from Fed, European Central banks and the Bank of Japan recently. Sensing that, to address the toxicity of the disease, the patient first needs to survive (be solvent), the US treasury decided to pump in USD 250bn. by way direct stake in many large and small banks. The Swiss central bank too joined in providing capital. It is estimated that more than USD2 trn. has been injected, and no one is sure that how much more infusion may be required.

In the meanwhile many other parts of the body have started showing signs of deterioration and have called for treatment. Hungary and Ukraine were offered financial help by international institutions in an effort to stop both countries following Iceland into turmoil. Others that have been mentioned are Russia, Kazakhstan, Argentina, South Korea, Serbia etc. The list is only going to increase.

One has to understand this situation in context. The patient has been diagnosed of cancer very close to terminal stage and right now the effort is to keep him alive, so that further treatment can be given. This has been achieved by and large. This does not mean that respirator, IV, and monitors have been removed. The condition is still serious and any further mishandling of the situation can cause irreparable damage. Also given the elephantine nature of the patient, the doctors have treated the parts that they thought were relevant to them/were experts in, with some level of coordination. Each of them has announced their own treatment/management plan, which they believe is right under the circumstances. They also need to come together to chalk out a common approach and execution strategy. So chemotherapy has to be administered and if necessary radiation will also have to be given. The frequency and dosage has to be assessed in a coordinated fashion. The pain, suffering & side effects of this treatment are going to be enormous. If the patient does withstand this and come out of it we are lucky. If the treatment and its management turns out to be faulty the patient may be no more with us and may take all of us with him, given the resources we would have spent on him to keep him alive.

The meeting in New York in November of the key world leaders post the American election announced today, is the beginning of the discussion on a coordinated management plan and execution strategy that I have talked about. This execution plan will have multiple players with different view points with local political compulsions. The so called ‘Sinatra doctrine’ needs to be avoided. The only silver lining is that they all stand to vanish if the management & execution is not coordinated with the desired effect i.e. a common enemy they need to fight to avoid extinction.

The environment in which such a plan is to executed is to be understood.

1. Trust in the system is at its lowest….some of the sentiment expressed provide a taste

--- Vladamir Putin was on CNNMoney.com saying that the world has probably lost confidence in Wall Street FOREVER. Forever is a long time. Why have they lost confidence? Because Wall Street and its "investment experts" have been selling fraudulent securities to the American public and to foreign investors for years. And now the game is OVER. The fraud has been exposed.

--- Americans and foreign investors have entrusted their money (and their retirements) to these fraudulent firms for years. Sadly, because of Wall Street's deception and greed, America will FOREVER lose its position as the center of world finance and investment. Why should investors, foreign or domestic, place their money into the trust of Wall Street money managers who have bankrupted their companies, walked away with million dollar salaries and bonuses and are now bankrupting America and the rest of the world?

--- A survey of more than 100 chief financial officers and other senior executives -- conducted Wednesday -- found 56 percent expect to reduce payrolls over the coming year. A majority polled by CFO Magazine also predicted falling revenues and plan to cut operating costs by at least 5 percent.

2. Admission by a senior executive like John Mack Chairman and CEO, Morgan Stanley that a lot more deleveraging is to come.

3. Also the fact that banks around the world have acknowledged $600 billion in losses as part of the financial crisis. The latest International Monetary Fund analysis suggests they still have another $800 billion in losses ahead of them — and a good chunk of them will occur in US.

4. Experts’ opinion that the banks may not use the capital injected to lend but look at possibilities of retiring high cost debt and take further write downs. Further new toxins are being injected daily further postponing lending. If forced to lend given the current condition of the consumers, especially in the western world, possibility of increased defaults is also high.

5. The regulatory system and its related organizations as they exist are going to be increasingly unsure in the wake of the call given by various world leaders –

a. European Central Bank President Jean- Claude Trichet said officials reshaping the world's financial system should try to return to the ``discipline'' that governed markets in the decades after World War II. “Perhaps what we need is to go back to the first Bretton Woods, to go back to discipline,'' Trichet said after giving a speech at the Economic Club of New York. ``It's absolutely clear that financial markets need discipline: macroeconomic discipline, monetary discipline, market discipline.''

b. “Measures should entail a rethink of supervisory rules on markets, banks, mortgage firms, hedge funds and private equity”, European Commission chief Jose Manuel Barroso said.

c. U.K. Prime Minister Gordon Brown called for an overhaul of global financial regulation and an ``early warning'' system to prevent banking crises, setting up a trans-Atlantic clash over world economic management. ``Now we have to create the institutions that are relevant not for national and sheltered economies, but are relevant for the global economy,'' Brown said.

d. Lord Turner of Ecchinswell, who took over as chairman of the Financial Services Authority UK last month said, "When you've been through a crisis like this, it's rather sensible to wipe the slate clean in terms of all your previous assumptions," Regulators should be prepared to engage in a fundamental debate about how to set banks' minimum capital requirements following state banking bail-outs in Europe and the US.

e. French President Nicolas Sarkozy called for regulating rating companies and ``necessary supervision'' for hedge funds. Treatment of tax havens such as the Cayman Islands and Monaco may be overhauled as part of any new global financial framework, he said.

f. Australian Prime Minister Kevin Rudd said credit-rating companies face a ``day of reckoning'' as he blamed ``obscene failures'' for a financial crisis threatening to engulf the world.

g. United Nations chief Ban Ki-Moon has called for “deep and systemic” reforms based on inclusive multilateralism for a global financial system that can better meet the challenges of the 21st century.

One therefore needs to look at a new global social contract – a global new deal, which given the diversity of the players may take some time to be put in place, and then keep changing based on how the power equation and local political compulsions change.

6. Any change in the mark-to-market/fair value accounting standards could have far reaching consequences as commented by an expert:

“The Savings and Loans crisis in the US during the 1980s and the Japanese crisis of the 1990s prolonged for lack of fair value accounting. In both cases, many banks had become insolvent because market values of their assets had fallen below their liabilities.

They, nevertheless, continued to operate because the then-prevailing accounting rules permitted them to hide their losses by recognizing assets at their unrealistically high historical costs. They were therefore solvent according to their reported numbers, which did not reflect their de-facto insolvency. The accounting solvency is one reason that prevented regulators from stemming the loss.”

This is just a sample and I’am sure there are many more such issues to be handled. The point I have been trying to make with cancer patient analogy is that it is not going to be a easy way out and trying to use the contrarian approach of ‘buying when others fear’ may not be prudent at this stage which the legend Warren Buffet has touted through his editorial in last Friday’s New York Times. It may suit an investor like him who can get hedged deals and can talk in terms of billions. For the average investor I would tend to go along with Jeremy Grantham who says the biggest mistake may be buying too soon. But his best comment is to the question:

Do you think we will learn anything from all of this turmoil?

We will learn an enormous amount in a very short time, quite a bit in the medium term and absolutely nothing in the long term. That would be the historical precedent.

My focus next week will be the Indian Markets. We should hopefully see a short term bounce back of Nifty from the 3000 level this week.

Best Luck.

The Rules of the Game are Changing

Whew! What a week this has turned out to be! It was the worst weekly performance ever for most of the key markets including India’s. The fall in Nifty since January has been about 47 percent and the trailing PE multiple is back to what it was in 2005 at14. The trailing PE of CNX Midcap index is at 8.5, last seen in 2003. The pundits in this game are still not sure if this is a good time to buy, some feel with major earnings downgrade to come, the market is still not cheap.

Policy measures globally are coming thick and fast to stem the rot but appear to be of no avail. The outcome of the G7 meeting would be crucial and the rescue package that was recently approved by the US lawmakers itself is likely to take a new face with the contingencies provided their-in being invoked with Paulson talking about taking direct stakes in the troubled banks to infuse liquidity quickly. Also talk of guaranteeing all the deposits is also on. The EU still has to put up a common plan with diversified interests playing their role.

The Indian government has done its bit to release liquidity into the system by reducing CRR to 7.5% from 9% which would release about Rs.60000crs. (Rs600bn. i.e. approx. USD12bn), which other wise was held by RBI and was not circulating in the banking system. RBI has also been injecting temporary liquidity into the money markets since the beginning of the crisis. Assurances have come that more measures to ease liquidity will come as the situation evolves. ICICI bank has gone a long way using various forms/platforms to assure that things are fine with it.

For those who want to understand the why and how of today’s situation I recommend the following radio show which albeit an hour long, explains it in a lucid manner.

http://www.thisamericanlife.org/Radio_Episode.aspx?episode=365

Future - What Holds?

What does all this mean? How will the future look like? A question that is arising in everybody’s mind and frankly, no one knows. Most people can only speculate. To feel and act contrarian looks compelling to a lot of professionals given where the markets are today. Contrarian thinking calls for thinking against the tide assuming the one way move has been overdone, which could be both when moves are sharply up or down. This CONT process (CON – Contrarian, T- Thinking), if you will, is more a sense and feel to be devils advocate and compelling mindset that says that this one sided move has been over done and hence should correct and therefore positions opposite the trend should be taken. Many contrarians are also value seekers and feel the stocks relative to asset values/book values/replacement costs are undervalued.

Prima facie with the kind of fall we have seen this would be very valid thought process and many may succeed with handsome rewards with this strategy. I would like to put a warning note here. The events that have unfolded over the past couple of months are unprecedented and have very little resemblance to some of the key market falls of the recent past.

http://www.nytimes.com/interactive/2008/10/11/business/20081011_BEAR_MARKETS.html
While it is true that most bull markets have taken roots in easy money/low interest regime and fallen into bear zones as cost of money/interest increased and liquidity tightened, the level of leverage/borrowings seen in the preceding boom period is unprecedented. Borrowing 30 to 40 times net-worth (the investment banking phenomenon), the outstanding derivatives (worth USD600trn. plus - visit
http://www.nytimes.com/2008/10/09/business/economy/09greenspan.html?partner=rssyahoo&emc=rss), the sheer size of the assets funded through these borrowings which have no price or quote etc. has not been witnessed by many of the past falls and bear markets.

Further the global interconnect that has been witnessed this time has no parallel in the past as these cheap funds/leverage found its way to all the key country-markets-asset classes. In this sense the concept of risk reduction through diversification into global or international markets has fallen on its face. This realization has come a little late and the first signs were witnessed when a coordinated rate cut by all central banks happened last week. But this is not going to be an easy task, as each governments has its own constituencies to address and have to see congruence in their political and economic agenda.

So what does all this mean? To me it appears that the rules of the game are set to change and to assume CONT thinking may not be the way to go. And the way the game is going to played in the future is very likely to be different. We need to move to what I call ‘Calibrated Thinking’ or CLBT. The elements of CLBT would be influenced by a number of factors. Some of the key ones which come to my mind are:

1. The leverage levels that currently prevail (even after de-leveraging to the current level) are still high. Overall the world economy, after this experience will look to maintain a level of leverage that is much lower than that we have seen in the past two decades or so. So globally the tendency to spend on borrowed money is going to come down substantially.

2. The level of mistrust between banking institutions will take some time to repair. As of now it appears unless the central banks of some of the western economies stand as counterparties, the flow of credit between banking institutions at a reasonable cost is going to be difficult. Even in the future the internal norms of these institutions of assessing each others credit risk and provide credit limits to each other is going to become extremely conservative. This in turn means lots of checks and balances and delayed decision making resulting in low velocity of funds/credit flow.

3. So, even if the cost of credit comes down over time to help the world economies overcome/ride the downturn, the flow would be stagnated as risk aversion and bias against credit – both on the lending & borrowing side – would make the players extremely cautious – both sides having burnt their fingers.

4. With investment banks gone, gone are the days where large proprietary positions are taken aggressively using leverage. Even the commercial banks which can leverage 10 to 11 times would be extra cautious. The so called hot money flow/foreign funds flow/foreign portfolio investments/ which were essentially arbitrage funds would see its scale diminish drastically. The movement in the markets is therefore going to be much more muted than what we have experienced over the last four years or so. This would suggest that the markets will take a long time to adjust to this new reality before any meaningful move can happen.

5. Following from this is the uncertainty about the fate of so called Hedge Funds where leverage was a large element in their operations. A number of new laws and regulations are going to sprout once the dust settles. No body can be sure what shape and depth this can take. Regions like the European Union (EU) is going to look take a hard look at the future of political and economic congruence of objectives. The coordinated effort has been difficult to come by given the internal politics in each country and the common economic agenda of the EU. We may see Euro vanish and the old country wise currency system back.

6. The effect on the real economies of the world could be really bad if the resolution does not come quickly. This could spill on the main street in terms of job losses and the attendant consequences leading to unrest like situations.

While I believe these are the important factors, there may be other factors which I may have missed and those which come up as this turmoil unfolds further. With all the uncertainties discussed the only thing that is certain now is that the landscape in which future investing and trading will take place is going to be dimensionally different from what prevailed till recently. As these emerge and some sense of its direction comes forth, taking a blind contrarian view may not be the best thing to do. It may work in the shorter term, to play the technical bounces, but can be disastrous in medium/long term.

This is where CLBT comes in where the methodologies used for investing needs to be recalibrated as those which succeeded in the past are unlikely to work in future. You need to think like a maverick, take a measured view and be cold and calculative as the scenario unfolds to understand its influence on the flow of money, its direction and the sectors to which it is likely to be attracted in the new landscape. Remember this new landscape itself may take a year or two to establish itself.

Right now cash is king!

I look forward to exchange of views and would look to update this blog weekly to begin with.

Best luck for the coming week.