Readings: An awful time to invest, Sensex at 50k, SWF in India
- Hussman Funds: A Who’s Who of Awful Times to Invest
. . . on average, the market has lagged Treasury bills in conditions similar to the present (though the skew, depth and abruptness of the historical losses in this case are striking). No evidence to take market risk, no market risk taken. Our strategy is to align ourselves with the prevailing return/risk profile of the market, knowing that there will be many, many attractive periods in which to accept market risk, and that these periods have historically provided more than enough opportunity to capture strong returns over the full cycle, with subdued risk.
- Morgan Stanley: Sensex to hit 50, 000 by 2020
Sensex will cross 25,000 mark by 2010, which big bull Rakesh Jhunjhunwala predicted in 2005 only. Another brave statement from world’s leading investment bank Morgan Stanley predicts Sensex to cross 50,000 mark 12 years from now.
[From 15k to 50k in 12 years => ~ 10% annual return. Not that brave a prediction.]
The government and Reserve Bank of India are nearly ready with an indigenous model of Singapore’s Temasek — a government-owned investment vehicle that will use foreign exchange reserves.
[This is also called a Sovereign Wealth Fund (SWF). Morgan Stanley estimates India to put in ~$50B over time.]
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July 18th, 2007 at 8:43 am
Now with the news of 2 Bear Stearns Hedge Funds collapsing with now money left, I wonder where RBI has parked all the Nation’s FE reserves. Do they Hold exotic AAA rated papers? RBI does not publish what it holds in US assets. It is reported that Wall Street Mafia have been targetting Reserve rich nations to part with their US assets by offering under the table incentives to their officials.
July 18th, 2007 at 6:37 pm
The RBI, Ministry of Finance and EXIM bank convert their dollar holdings into US Treasuries. I believe most of these are in 1-year, 2-year and 5-year Treasuries.
Fortunately, they do not invest in exotic credit instruments like CDOs, CMO, tranches etc.
July 18th, 2007 at 6:40 pm
And even if they do, we might have a LTCM-style bailout by the US Fed; so the RBI should be ok
July 19th, 2007 at 6:17 am
US fed only looks after US Mafia. If any Foreigner (especially Asian Central Banks) looses money no “Bailout”. They will say sophisticated investors should have known the risks. So it is prudent for Asian Economies to use the foreign exchange to develop their own internal economies, rather contributing to Iraq War “bonds”, US “Trade Deficits” or helping US homeowners to acquire home with “liar” loans.