For those diehards in the stock market, the recent carnage in midcap stocks has once again dealt a body blow..The extreme volatility has left may confused and even wondering whether to invest in other assets such as gold or real estate. While gold and real estate has its own place when it comes to investing, for diehards like me its the stock markets . Investing in stock markets has many advantages e.g. ease of bye/sell, tax benefit in the long term etc. The important thing is one has to be careful in selecting stocks. And the mantra now is good transparent managements with proven track record. These companies will be able to weather the tough times best.
Tough times have been with us for quite sometime now and looks like its getting tougher . First the rate increases by the RBI. This lowered the the profits of companies and even turned them into loss making ones, because of increase in interest costs. Then inflation continues to remain high. Growth rate has fallen to almost half. Unemployment increases, demand falls and a vicious circle starts. The perfect concoction for "stagflation" - which is a situation where growth falls, inflation remains high and unemployment rises.
C Rangarajan chairman of PM's economic advisory council and former RBI governor has said that economy is facing stagflation.
It is to be seen what steps Govt takes to get back into the growth path. Until then one can defer any further investment and let the money earn FD interest. For stocks in the portfolio, its time to get rid of junk companies and wait for puting into only the bluest of the blue chips. About these I will be updating in my following posts.
Until then
Happy investing
Tough times have been with us for quite sometime now and looks like its getting tougher . First the rate increases by the RBI. This lowered the the profits of companies and even turned them into loss making ones, because of increase in interest costs. Then inflation continues to remain high. Growth rate has fallen to almost half. Unemployment increases, demand falls and a vicious circle starts. The perfect concoction for "stagflation" - which is a situation where growth falls, inflation remains high and unemployment rises.
C Rangarajan chairman of PM's economic advisory council and former RBI governor has said that economy is facing stagflation.
It is to be seen what steps Govt takes to get back into the growth path. Until then one can defer any further investment and let the money earn FD interest. For stocks in the portfolio, its time to get rid of junk companies and wait for puting into only the bluest of the blue chips. About these I will be updating in my following posts.
Until then
Happy investing
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