Is it too early?

Euphoria. Last three days, bull rally across all indices. Banking stocks all up. Advise you to book profits now. Next week will be rocky again on profit taking.
This is the time markets are up and USD is weaker. Signs of cash moving out of T bills and bonds and into equity. More of this and USD will depreciate quickly. With interest rates so low and continuing so low, bonds should crash further. Perhaps 50% of portfolio locking in bonds for a 1-2 year term would be a good bet. 10% in cash and 40% in day/short terms trading in stocks could be a good strategy.

More Pain

A few weeks back when I started this blog, I firmly believed that the worst was over and it was time to get some returns. How wrong I was. Portfolio has dived by another 10% in last two weeks.

I am contemplating buying Tata Motors bonds at discounts of 50%+. Some bankers tell me Tata Motors is already insolvent and it's only a matter of time... If companies like Tata Motors will go belly up, it will be a catastrophe. With the elections looming and public goodwill in short supply, no political party can afford it. Perhaps the risk is still very much worth the return.

Buy CHF, AUD, Sell USD, NZD

Dollar is at an alltime high because of the fear in the equity markets. The premise that American debt is good for a 2.5% return over 10 year bonds cannot last. If you have a portfolio with base value currency or base exposure to USD or SGD assets , time to diversify. Yen which seemed a good bet last few months, looks highly risky now due to political and policy reasons. A good bet would be AUD and CHF with a tenor of 6-8 months.

TomTom

A few years ago, the entry of one company, TomTom changed the portable GPS market in it's entirety. A very bad navigator, I used to thank my stars, the US government and TomTom, in that order. The US government for setting up a free sattelite system for the world and TomTom for singlehandedly putting intuitive navigation in the palm of a hand. Having used Garmin, Magellan, Pioneer etc.etc I can vouch that TomTom is the friendliest of all. Easily, the Nokia of GPS devices.

Unfortunately, the company grew too fast and took on a load of debt. It is currently quoted at it's lowest at € 4.20 and is showing no revival since last 6 months. The product is still the best and the stock very worthwhile to buy should it start showing life again.

TOM2 quoted on Amsterdam index.

Geithner could look towards Singapore

The stark differences in approach between US and Singapore are clearly evident. The authorities in US are coming swinging huge blunt instruments in an effort to kick start the demand. No specific details and no specific outcomes targeted. Throw the money and hope some of it will stick in right places.

In it's budget 2009 , Singaporeans unveiled such specific and targeted steps that you have to marvel at their thoroughness. A good balance of job preservation, job creation, tax cuts and demand creation. Specifically aimed towards employers, employees, service providers and consumers.

Admittedly Singapore is a small economy, easier to micro-manage and MAS can finetune as it goes along. But nothing can beat detailed planning and outcome orientation in such hard times. The US could have done much better in this regard.

Property Developers

Some of us book apartments thru developers. Typically, it is a pay as you go scheme. What happens if the developer goes bust? The land and buildings are his assets and presumably hawked to the banks. How do we recover our money? If the property is almost near completion but still not alloted or ownership passed, does it then become part of bankrupt assets?

There is a lot of speculation in India on Unitech and DLF going bust. Friends of mine have paid up 100% advance against a discount of 12%. Is'nt that loaning money to the developer against an asset which is not even theirs?

Is there money in banks (2)

Today the bank stocks tumbled in view of the mixed message sent by US Treasury. Will there be a bad bank or unlimited support for bad banks?? There seems to be no clear answer from the authorities. And if earlier the American public was reckless with spending, the government is even more profligate.

The banks may still bounce back when the current shudders have passed, but the US Dollar has only one way to go. Down. With so much spending and printing of currency expect the Dollar to weaken sharply in next 1-3 months to levels not seen before.

Earlier the stocks and bonds market had a inverse relationship making the dollar stronger everytime the stocks sank. Yesterday both sank. Is that the dawn of realisation that Dollars are no more a safe haven?