GalaTime

• Morgan Stanley: 10-year G-Sec Yields – Heading to Seven-Year Highs

Over the last few weeks, the provisional estimates have been revised up by about 100-150bp. By that measure, there is a high probability that inflation for the week ending May 17 will likely be revised to around 9%. We believe that headline inflation will rise further to double digits due to the depreciation of the rupee and the likely increase in domestic fuel prices by 15-20%, affecting the sentiment for G-sec paper.

The combined centre plus state deficit including off-budget liabilities will be about 9.4% of GDP in F2009.

About 85% of the total US$183 billion capital flows that India has received over the past four years have been in the form of non-FDI flows.

As of mid-May, the excess liquidity stock was US$43.6 billion (down from the peak of US$$63.4 billion as of February 2008). If capital inflows continue to slow, the excess liquidity stock would be unwound, further pushing 10-year bond yields higher.

Bottom-line: we are screwed.

• Economist: Recoil

• Munger: Art of Stock Picking (a golden oldie)

If you look at Berkshire Hathaway and all of its accumulated billions, the top ten insights account for most of it. And that’s with a very brilliant man Warren’s a lot more able than I am and very disciplined devoting his lifetime to it. I don’t mean to say that he’s o­nly had ten insights. I’m just saying, that most of the money came from ten insights.

So you can get very remarkable investment results if you think more like a winning pari-mutuel player. Just think of it as a heavy odds against game full of craziness with an occasional mispriced something or other. And you’re probably not going to be smart enough to find thousands in a lifetime. And when you get a few, you really load up. It’s just that simple.

Long, but excellent read.

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