This is my economic diary, my not so politically correct and at times not necessarily a valid criticism of the happenings in the Economic world. This is my attempt at understanding how value is created by some countries (companies) around the world for their citizens (stockholders) and even at times for other stakeholders.
I started following Indian Market sometime during the Internet Bubble. The rise of the new economy was herald at that time as a paradigm-shifting event. While Internet, did shift business practices and lead to development of new and exciting business models, Valuation of a Business has remained firmly on the two fundamental principles.
- Future Cash flows from the Business and perceived riskiness of these Cash flows.
- And the rate of return desired by the marginal investor in the business.
As French proverb says: plus ça change, plus c'est la même chose which means "the more things change, the more they stay the same"
Since the internet bubble, study of Company and their stocks has been my passion. One thing I did learn from that incident that History often repeats itself from Dutch tulip mania to the recent Global Financial Crisis. It might not repeat in details but it does in broad strokes.
Investors, at least most of them would always fall prey to the fads of the day, overpay for the future expectations and someday this bubble would burst and many investors loose money. Companies that have performed well in past would fall like Fallen Angels. There would be malinvestments, industries would rise out of no where, capital investment in economy increase and then suddenly everything goes awry and it burts like a beautiful dream on a warm summer morning.
However, in-spite of all this there would always be some companies that would end up making real value for investors. Its these companies that makes Investing in stocks a highly profitable and fun activity. And I enjoy studying them.
Investors, at least most of them would always fall prey to the fads of the day, overpay for the future expectations and someday this bubble would burst and many investors loose money. Companies that have performed well in past would fall like Fallen Angels. There would be malinvestments, industries would rise out of no where, capital investment in economy increase and then suddenly everything goes awry and it burts like a beautiful dream on a warm summer morning.
However, in-spite of all this there would always be some companies that would end up making real value for investors. Its these companies that makes Investing in stocks a highly profitable and fun activity. And I enjoy studying them.
Investment analysis by its very nature requires investors to create their own mental models, look at an issue through multiple angles: Economics, Sociology, Politics, Game Theory, Corporate Finance, Psychology to name a few. I do not profess here to be master of anything. But Investment is my passion and I do think I am a student of these subjects, and I will be till time do us apart (me and investments).
I do hope that through my analysis of Companies that make true economic value for the stockholders. I could help an Investors pass over investment because of Fads... that is my hope.
