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Financial Non Traditional Thoughts

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I was wondering the other day why more more sophisticates rich people make more than the unsophisticated in stock markets

Sophisticated have better access to information more speedily than the others from a variety of sources they are in touch with .

They sift thru them quickly with tools and agencies at their command and make a killing due to first mover advantage.

Once they become richer than the slow movers they add on by multiplying it by reinvesting again .

So it is a continuous spiral of money multiplication which leave the ordinary far behind.

There are some theoretical studies to find out the multiplier effect of the sophisticated rich in share market.

Moral of the story is keeping ears open to a wide circle of contacts in financial world is a must for money appreciation.
 
Janaki Jambunathan said:
https://www.google.co.in/url?sa=t&r...rggU2YBsEcaeArObA&sig2=VkSFLH_dN3Of3IVZ0b9dhA

What is deflation - Is it bad ?
Click to expand...

Some are misleading you that india is on growth path.

We are in a deflationary cycle.

In fact there is danger of global deflation and india cannot escape its effects.

Size of our economy is small as compared to china or US.

Europe is in trouble . Smaller countries are in serious danger in euro zone but propped up by germany and france.

There is hardly any incentive to produce for our industries and most have excess capacities or trying to consolidate by merging with others.

The mood is wait and watch.

Foreign money is hot money and is likely to reduce whenever US hikes interest rates.

Our markets are propped up by domestic financial institutions and rupee level at rs 66 is due to RBI selling its dollar chest.

This year , the govt is at standstill . we have to see what happens next year.

Deflation is going to hurt india badly . You would do well to hold on to your money and spend only if absolutely necessary.

What you getting now , will be at much lesser price in a year or so from today.

All global economists are predicting a doomsday scenario.

Who will be hurt how much is not known. No one denies , a lot of economic pain is still left
 
Janaki Jambunathan said:
Could that be Algorithmic Trading - I have no idea what that means!!
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I have simplistic knowledge of it. I understand high investing agencies decide on trading in shares using an algorithm which breaks large trades into smaller ones deciding

on price , time of buying and volume, this is done electronically fast processing the info. recd on shares and prices and deciding buys unlike humans who take time to

evaluate the inputs, normally these trades are high frequency trades. individuals normally do not induge in it . It is only investing companies get into them.

technically anyone can but one is required to register at the exchange for it and get their algorithm pretested and approved
 
India has a protected economy.

Indian banks many of which are govt owned get recapitalised often with doles from govt.

Their NPAs get written off and those who borrowed get away scot free.

We throw a lot of money into agricultural sector also writing off farm loans often taken by large farmers.

we protect our markets by purchases from domestic financial institutions which are govt owned.


Our rupee is propped up by RBI.

Our govt is our benefactor.

All live off it

Since it a partly a controlled economy, nothing much has happened to it.

We have survived the dot com , 2008 crisis . We will survive interest rate rises in US also.

Even 1% rise in fed rates can send tremors in india.

As long as there is confidence in american dollar we can get by.

US will keep giving stimulus to save someone or other.

It was investment banks and car makers in 2008 and later

Now it might be for health care or social sector programmes of obama.

US is a nation living on debts and huge deficits it incurs and increased consumer spending .

As long as people have confidence in US economy , others will continue to trade with it and supply goods and services to it.

If others do not, they can invade some country using its military might on some pretext or other and grab their assets like oil or minerals they desire to have.

Thats the advantage of being a single strong global military and economic power.

We can play to their desire for our services in IT or some other field , palm of our pharma products and collect some crumbs to bolster our economy.
 
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Some are misleading you that india is on growth path.

We are in a deflationary cycle.
Click to expand...

I recently spoke to two traditional grocery shop owners in my locality ( South Chennai ) and both of them are saying that their future is bleak as people's purchasing pattrens have changed & too many players have come in especially through online and while right now they can manage but in future they may find it difficult and so these shops never have a holiday ( previous they used to have Sundays Off ) and they work up till 10 p.m in night and do door delivery and give one month credit which is what they say helps them retain the customers . But with increase in labor cost they say they will find it difficult to maintain this door delivery system .

Another shop in a prime commercial area selling Suit Cases etc closed down recently and I have seen them announcing many times 30-50% Sale but never found that shop crowded much .

Shops selling Refriegrators , TV and other House Appliances are no longer crowded and I asked one shuch shop Manager and he told people purcahse most of these things online and only some regular traditional customers are coming to buy from the shops .

So basically people and couples in the age group of 25-40 especially in Cities are doing more of their puchases ( from groceries to clothes to household appliances ) online and that is very much affecting the traditional shops and business establishments .OLA and other Cabs that are based on APP based booking are taking away the business of regular Cab services and Autos .
The only business that is still going well in a traditional manner is restauranats but they too have changed their business and service model due to hig cost of labor .
So in the end there is a form of destruction of the old economy to a new economy and those people who could make a smart trasition to this new economic model will survive but the others will fail and this will have a cyclic effect on the economy and I am seeing only more and more people involved in business are very desperate not knowing what to do in this fast changing world .
 
Another painful day for senior citizens.

RBI is likely to cut further repo rates by another 25 basis points which will further make bank cut FD rates.

So we may end up with lower FD rates in 7-8 % range.

IMHO higher inflation accompanied by high interest rates is really good for pensioners and low income fixed income groups in govt getting compensated for inflation

Infact 1980s were considered golden years with 12% FD rates. Working couples both in govt agencies got double compensation for inflation rise as it was reflected

directly in their pay packets. In my family I consider them my golden years.

Indiscriminate lowering of interest rates to improve credit offtake by capitalists ins anti labour. Labour classes -one of the poorest paid in our country need to be better looked after

Labour and LIG suffer most in this economy. Most of us who claim to be upper middle class are at best lower middle class by global standards.With 80 percent of india

falling into this class, Sooner we change our economic model and get away from rules of open economy , better it would be for us.

Else zero % interest regime like the US is not far away. Then one has to use up whatever capital left with us and have a paupers funeral when we die.lol
 
The govt can move in to protect senior citizens as they do not have social security like western countries.

They can pay 9-10% interest tax free on pension accounts which can be separated from normal accounts so that only pension money is put into it.

It will save senior citizen from taking cumbersome FDs and keeping track of it. It will save banks book keeping .
 
krish44 said:
Most of us who claim to be upper middle class are at best lower middle class by global standards.With 80 percent of india falling into this class, Sooner we change our economic model and get away from rules of open economy , better it would be for us.
Else zero % interest regime like the US is not far away. Then one has to use up whatever capital left with us and have a paupers funeral when we die.lol
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With 80 percent of india falling into this class.........
Sir,
You think like a great economist!!

Most of the great economist may not know there are some other forgotten classes... of people

poorest of the poor, poor..... all below poverty line......... live in rural India..... forms more than 70% of the total population. They don't care what your interest rates would be.They always have paupers funeral when they die.

They do not know the parlance ............Inflation and deflation.

However they sleep well despite the raise and fall in market prices and interest rates. lol
 
YESMOHANji
Poorest of the poor might be around 20%.

For them except their daily meal nothing else matters. All rojgar yojanas are for them.

All economists of govt category only think like me.

Most of them do not have a degree in economics and have pased some competitive exams some thirty years back and got into economic ministres.

So are our bankers.

Since we have been operating on this environment all can pose as economists and add to the collective wisdom[Fooishnness?].

By exposure to life , we also know what is good and bad economics.

We can shed some tears for the poorest of the poor and plan for the 60 % falling in the mid category of trishangkus . those who claim to be middle class and actually

are lower classes.They have low salaries, pensions and some deposits.

Sleep has nothing to do with all this . As long as tasmac and their counterparts in other states are there , the poorest will sleep pretty well
 
Another painful day for senior citizens.

RBI is likely to cut further repo rates by another 25 basis points which will further make bank cut FD rates.

So we may end up with lower FD rates in 7-8 % range.
Click to expand...

Luckily one of my Mother's FD in a PSU Bank I had given it for auto renewal previously itself and so when it got over 3 weeks back it got renwed to an interest rate of 8.75% pa ( 0.5% extra for senior citizens ) .
 
Raghuram rajan surprised the markets by lowering by 50 basis points the repo rate to 6.75 % instead of expected 25 basis point cut.

more interesting was his prediction of inflation to 4 parcent FY 2017.

He also allowed FDI access to debt papers of central and state govts.

Those who invest in them might get better return than equities.

Whether Govt banks will pass on the relief to borrowers in housing or car buyers is to be seen

SBI lowered prime lending rate by 0.4 %.

Other govt banks may have to follow.

The message from govt is borrow like hell instead of saving and consume more. you will be a patriot.lol

Govt will implement seventh pay commission to put money in hands of govt employees . State govt will also follow the central example.

In anticipation , all can participate in big sales of online companies before diwali with borrowed money.

nothing like living on future money receipts.
 
Lowering repo rates alone is not going to help growth much.

There is so much excess unused capacity in plants which have to be utilised before anyone borrows.

If economic activity is to be demand led, then money is required to be put in hands of people by prepaying salary revision benefits to central. state govt employees and

releasing festival bonuses. If any one wants to buy , domestic demand is likely for foreign goods such as ipad6 , mob, foreign TVs etc. I am talking of

discretionary consumption here. That does not help sale of domestic manufactured goods much.

What can enthuse private players for growth could be GST , removing infra bottlenecks, ease of doing business by cutting down on govt rules and procedures.

Then , private players might even ask for more interest rate cuts. There is no end to their desires.....

Whatever enthusiasm was got by rate cuts got washed away by global cues about deflation and lack of demand abroad.The stock market sensex after a high rise fell 200

points

If rate cuts of 125 basis points this year By RBI get transmitted by banks to a larger extent to end customers , loans may be cheaper.

Housing finance and car loan might be cheaper, but pushing affordable housing to a gullible lower middle class with teaser loans might end up like the mortgage crisis

in US. Indian job situation depends on global factors. If there is a global down turn , many can get stuck with loans as in 2008.

Our deposit rates further lowering will increase the pain for senior citizen. Even ppf rates might be hurt. In retrospect ,my knee jerk reaction to increase exposure to

stock market diverting savings is paying off.
 
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My knowledge in Economics is very much limited despite the fact that one of my post graduation degrees is in Mathematical Economics.

Whether any non traditional explanations are given by any modern Economist for " inflation and deflation ".

I could not understand the real meaning of the following:

"Some are misleading you that india is on growth path.

We are in a deflationary cycle."
 
Janaki Jambunathan said:
https://www.google.co.in/url?sa=t&r...KgL48LTseaoqojGjQ&sig2=bO5CjnaY-ypUhefjhtuydg

Rate cut is likely toaffect depositors - How they would be copensated?

Raghurams anwers this in the link Is it really convincing?
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The argument that capital depreciating due to inflation is bad and it is better to have lower inflation and less interest due to lower rates , I do not buy.

The cash in hand now by way of more interest is more valuable.We can use it to buy items which are not inflation hit or items of our choice . food items of interest to

us like coffee powder, dals [with high vat] , restaurant eating are not reflected in any calculations . Immediate gratification is far more important . What happens in

future is not relevant to senior citizens? we want high deposit rates and returns on FDs . To hell with future capital depreciation . Who knows what will be new global

dynamics.Market economy will lose its relevance if there is one more 2008. Instead of housing bubble , it might be something else. US is unable to restore its original

interest rates of 2001. even half percent interest rates there sends tremors all over the world. Our attitude should be take what more we can get today without

worrying about capital depreciation in future. We will worry about that when we face that in future.
 
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Interest Rates are lowered down 4/ 5 times within the past two years step by step. Raguram is telling repeatedly that inflation has been going down since 2014.
The quite paradox is that Central Govt. has increased Dearness relief 4 times even after inflation is contained and going down. Banks and PSUs have also increased DAs.
Why? Why?
Which is a lie? Either Raguram's statement that inflation is going down or the Govt. Agency which compiles the prices prevailing in more than 60 centres and make a work out to calculate the consumer price index ?
In consumer price index - reckoned for DA calculation, the retail prices of rice,wheat,groceries,oils, vegetable soaps cosmetics,medicines ... & important items that are consumed in daily life......are included to compile with.

In Raguram's parlance inflation is compiled with whole sale prices of all domestic, industrial products like cement, steel Industrial consumable which are mostly irrelevant in day to day life to a common man ..... are included.
Don't compare incomparable.

Don't say compare the interest rates with whole sale price- indexed inflation.
Again, Don't compare incomparable.
If you say inflation is going down don't increase the DEARNESS RELIEF TO GOVT. EMPLOYEES.
 
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yesmohan said:
Interest Rates are lowered down 4/ 5 times within the past two years step by step. Raguram is telling repeatedly that inflation has been going down since 2014.
The quite paradox is that Central Govt. has increased Dearness relief 4 times even after inflation is contained and going down. Banks and PSUs have also increased DAs.
Why? Why?
Which is a lie? Either Raguram's statement that inflation is going down or the Govt. Agency which compiles the prices prevailing in more than 60 centres and make a work out to calculate the consumer price index ?
In consumer price index - reckoned for DA calculation, the retail prices of rice,wheat,groceries,oils, vegetable soaps cosmetics,medicines ... & important items that are consumed in daily life......are included to compile with.

In Raguram's parlance inflation is compiled with whole sale prices of all domestic, industrial products like cement, steel Industrial consumable which are mostly irrelevant in day to day life to a common man ..... are included.
Don't compare incomparable.

Don't say compare the interest rates with whole sale price- indexed inflation.
Again, Don't compare incomparable.
If you say inflation is going down don't increase the DEARNESS RELIEF TO GOVT. EMPLOYEES.
Click to expand...

Much of what you have referred to is all 'drama'. Everyone — government, RBI, banks, even the public (most of them at least!) is posturing. RBI could not have reduced interest rates just at the bidding of the government. So, they waited for enough time to weave a story that "inflation is steadily declining". But you and I have to pay more for our same monthly requirements; so DA is increased as otherwise the powerful unions will call the bluff. Take everything philosophically and say "Ladauto si" just like the Pope!
 
sangom said:
Much of what you have referred to is all 'drama'. Everyone — government, RBI, banks, even the public (most of them at least!) is posturing. RBI could not have reduced interest rates just at the bidding of the government. So, they waited for enough time to weave a story that "inflation is steadily declining". But you and I have to pay more for our same monthly requirements; so DA is increased as otherwise the powerful unions will call the bluff. Take everything philosophically and say "Ladauto si" just like the Pope!
Click to expand...
I also had a hike of Rs 2500/ in my monthly pension, during the period.
But person who are making double standards by saying inconsistent statements are to be identified to the general public.
The real reason for lowering interest rates is some thing else and best known to Raghuram and the top brat .....Controller General,Ministry of Finance.
 
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Food inflation is only a fracton of CPI index . Other retail items of consumption including discretionary items are included. These are taken in well off homes with children

in IT and MNCs. When cost of utilities, and food go up, we get increased DA. Our RBI copying the market economy models is opting for a low interest regime. It hopes to

spur investment.Middle class might only lose due to this planning .These finance managers do not understand indian ethos or requirements. So we will realise the hard

way when we see the results of their planning
 
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