Sunday, December 29, 2013

My investments in 2013 and the predictions for 2014

My best wishes to all my readers for a very successful 2014 - I hope you can help at least one person every day for 365 days in whatever way you can.

2013 was a reasonably good year from investing stand point even though my predictions of Dec 2012 went wrong.  I did not expect slowing down of the Indian economy and the resultant devaluation of the Indian Rupee. I had also expected the interest rates to come down and stock markets to do well. However, as I invest on specific stocks for the long term, my investments in 2013 have not been effected by my wrong forecast.  Here are my 2013 stock investments:

  • Wipro (Dec end  2012 –at Rs 386 – now it is Rs 555 –a 60% increase –that was pretty good)
  • Jubilant food (Feb 2013 –at Rs 1179 – now it is Rs 1259 –a 7% increase –that was not good)
  • Gruh Finance (March 2013 –at Rs 218 – now it is Rs 251 –a 15% increase –that was good)
  • Nesco (April 2013 –at Rs 790 – now it is Rs 790 –a 0% increase –that was not at all good)
  • Repco Home (April  2013 –at Rs 172 – now it is Rs 354 –a 106% increase –that was very good)
  • ICICI Pru FMCG Fund Marico (May  2013 –at Rs 56.89 – now it is Rs 57.87 –a 2% increase –that was not at all good)
  • Reliance Pharma Fund Marico (May  2013 –at Rs 72.3 – now it is Rs 84.15 –a  16% increase –that was good)
  • Marico (July end 2013 –at Rs 217 – now it is Rs 221 –a 2% increase –that was not good)
  • Asian paints (Aug 2013 –at Rs 424 – now it is Rs 485 –a 15% increase –that was good)
  • HDFC bank (Sept end 2013 –at Rs 600 – now it is Rs 669 –a 11% increase –that was good)

Beyond these stock market investments -  I also sold one flat in Bannerghata road in Bangalore and invested in a row house in Kengeri in Bangalore -  I expect this investment to grow well in asset value over the next 5-10 years.

My 2014 predictions are based on the following scenario –

May 2014 elections – a stable government is what everyone is hoping for. But with BJP, Cong and AAP in the reckoning – I am not sure if we can get a stable government. A split mandate could mean bad news for the industry and for the stock markets. 

I do not expect too great an year from that stand point. I expect the RBI to be under pressure to manage the economy as government policy would be weak. Interest rates would be kept high to control inflation. Fiscal deficit would be a concern and a rating downgrade would keep the RBI on the toes. Rupee devaluation would be a concern – we have seen a 11% devaluation in 2013 – I expect a similar devaluation and high inflation in 2014 if we have a fractured mandate.

I expect the US, Europe and Japan economies to improve further. This has good implications for our exports and the exporters in India would do well (IT and Pharma sector).  This also would keep global Gold Prices in USD under pressure as global investors would continue to flock to stocks rather than commodities like Gold.

In such a situation where would I invest?

  • For short term for 0-6 months– I recommend Liquid funds –that would give about 7-8% surely. 
  • For 6-24 months – I would recommend FMP’s – they also should give 9-10% returns.
  • For 24 months and above – stock market is surely a good option still. There will be companies that will do well and one needs to cherry pick the stocks - in case you want, please write to me – I have a Private Equity mailing list where I share my stock activities and you can also get that information.
  • For 60 months plus  – Urban real estate is still a good option. There is a bit of overheating in the real estate market   -so one needs to be careful. However, there are many ideas for investing in this space in every urban area in the country. My knowledge is limited to Bangalore and in case you want to invest in Bangalore and need some help  - please do write to me
  • Gold –I do not expect a great return this year. The global price of Gold in USD would be under pressure -it is currently holding at $1200 per ounce – I do not expect it to go below this.  The Rupee/US Dollar rate is currently around 62 – I expect it to be around Rs. 67-68 by 2014 end - an 8-10% devaluation (based on Indian inflation of 10% and US inflation of 2%) – that means Gold in Indian Rupee will give around 8-10% returns – that is the same as inflation in India. So investing in Gold in 2014 may not be a good idea – if you already have gold – then you would get around 10% returns (which means you have survived the inflation)

The key message is that in 2014, we can get a decent 15% plus ROI per annum on long term investments and appx 8-10% post tax per annum on short term investments. That is enough to “GET RICH AND RETIRE EARLY”.