This note is based on my 12
month predictions made in Dec 2012 – and to share with you my sense of where to
invest now.
So here are the key
predictions from my Dec 2012 blog –
· “The
US economy and the US dollar will emerge stronger over the year” – the US economy
has emerged stronger that what I had predicted. I had under estimated the
recovery of the US economy 6 months back. The US economy is not out of the
woods yet – but it is surely doing better than expected.
· “The
European central bank will continue with its policy of monetary easing” – here my
predictions have been closer and I do believe that the EU economy will continue
to splutter through the year.
· “China
and India will do better in 2013 than in 2012” – this has surely not happened.
· “Inflation
will fall and RBI will reduce interest rates in H1 -2013” – this has not happened
as envisaged as the inflation has
persisted due to the weakening Rupee.
· “USD/INR
ratio will go from current Rs 55 range to Rs 57 range” – here I had under estimated
the devaluation and we are worse off right now.
· “Gold
will beat inflation but will not be a great investment option” – here again I
was wrong as the gold prices have fallen globally in USD terms – and has lost
about 13% in INR terms over the past six months.
· “Industries
that I expect to outperform are FMCG, consumer durables and financial services”
– here I was partly correct - FMCG has
given close to 15% in the past 6 months and consumer durables have hung on and the
financial services is down appx 10% in the past 6 months
· “Real
estate would do better in 2013 than in 2012” – this seems to be true based on
Residex data released till March 2013.
So as is visible, my predictions were off mark – the key reason for this was that
- I
underestimated the US recovery (this lead to a sharp fall in Global gold prices
); and
- I overestimated Indian GDP growth (leading to a sharper devaluation of INR)
So where am I investing currently?
I have parked my funds in liquid
funds temporarily – till I find some good investing options. At this stage, with RBI’s actions not clear,
it is best to park funds in liquid MF’s.
I had sold most of my Gold ETF's last year - and I have moved out of gold
completely in Q1. I am not recommending gold yet. As long as the US economy
does well – gold will not give a good ROI.
I have signed up for a residential
property in Bangalore which I believe will double in value over the next 5
years
In the past 12 months, my
investments in Gruh finance and Repco have done well - and my investments in
Jubilant foods and Nesco have not done
well – but I am OK with these as I believe that over a period of 3 years all
these would do well.
I am looking at opportunities
in the equity markets - FMCG companies (Asian paints, Marico etc) is where my
eyes are right now. I believe that with
a time period of 3-5 years – there will be good opportunities here.