Financial Wisdom – By Kalidas

Radical Solution for Credit Crisis from Kalidas

US – A Nation on the Grill

with 24 comments

A true nature of a person or nation comes to the fore, when it comes under extreme duress. A bankrupt person, corporation or a nation tries very hard to project itself as a person of extra ordinary means, contrary to facts, figures and market rumors, and go on shopping spree

This is why billions of dollars are being paid by one bankrupt bank or corporation to the other in take over process lasting only a few hours. No due diligence, no submission of bid to the board, No minority interest, no news out – just black out.

Today’s scenario reflects “blind game”. No one knows about self or other party. The suitor does not know what he has, and the target does not know what it is worth. The vultures circling on the prey, ask for $700 billions with no questions asked. With worsening scenario being played out every day, no one in right mind will ever buy US dollar. Look at the box under Dollar Up and consider the following:


The President of United States, Senators, and Congressmen are stunned at the attack of unknown origin and extreme brutality. This is an act of extortion of $700 billions. Call it “Blackmail of Greenback” if you like.
  • Fannie/Freddie Mae got $200 Bln,
  • AIG $85 Bln,
  • JP Morgan got $59 billions ($30 Bln for taking over Bear Sterns and $29 Bln given to Bear Stearns itself),
  • Washington Mutual Bank (WaMu) was given $230 Bln in last 3 months, all zero now,
  • $673 Blns flooded into the market on Dow’s fateful day losing 778 points, and
  • Billions of others not yet declared but given to host of banks, brokers and investment banks.
  • $700 billions are now planned to be spent to buy the rotten and Zero value assets of the bankrupt banks.
  • Bernanke opened up the empty treasury and also opened up largest currency printing press in the world, working 247365 or 24 x 7 x 365 (24 hours a day, 7 days a week and all 365 days a year) Never before in the history of United States, the dollar was printed with such intensity and also disappearing with the speed of hurricane category 6 into a giant black hole

No foreigner in right frame of his mind would at this point of time buy US dollar against his own currency, be it Euro, Pounds, Yen, Yuan, Aussie Dollar or any damn local currency.

With Dow falling, bonds collapsing, properties dumping, interbank dealing sine die, who is buying the US dollar? Why Euro, the most suitable alternative currency for US dollar is falling, when it should have gone to almost magic 2.00 figure? If any foreigner wants to buy stocks or bonds or $ class assets, he has to sell his own currency and buy $. Then only $ could go up. But when the foreigners are not buying $, in fact, they are dumping dollar assets, who is buying this bankrupt dollar in that case?


About 10 years ago, whenever Dow rose, dollar also used to rise, because foreigners have to buy $ first before buying stocks or bonds. For the last 5 years, especially in last 3 years, dollar is falling while the Dow and Bond rising. This means that there is no demand for $ from overseas, it is only from within. The dollar so printed by FED is being used to manage (or manipulate) various sensitive commodities like Oil and other foreign currencies like Euro.


Who is Buying Dollars, Why and How?

Of course, the Americans by themselves. Not the ordinary resident Americans. They are just naïve and innocent law abiding citizens. The crooks are in the corporate world. Some US institutions, in US and newly floated off shore corporate entities, under the ostensible authority from US administration, are now buying US$ index and shorting Oil (Light Sweet grade) heavily on NYMEX. They appear to have been commissioned to search and destroy the vicious circle of oil price rise which is the major cause of inflation.


This is similar to the practice being adopted during the days of Clinton Administration when the Rupert Rubin was the Treasury Secretary. He was a proponent of strong dollar policy, and during his administration, the Asian crisis unfolded, Enron was created and busted, LTCM with over $1 trillions of exposure to the market was bankrupted. His policies and practice were known as “Rubinomics”. He engineered the rescue package for LTCM with the help of 14 local and foreign banks and brokers, raising $3.6 billion initially to $26 Billions progressively according to market rumors.


After 12 months, this group was disbanded saying that the problem was resolved. Even the best fund manager in the world, can not generate the return of $ 1 trillions or $1000 billions with meager $26 billions of fresh capital, that is, whopping 3846% return annualized. Show me a single fund manager in the world, including George Soros and Julian Robertson (now dead). The losses of $ 1 trillion are still in the system under various names and disguises.


However, both future contracts are subject to physical delivery. So on settlement day, these contracts are reversed by covering the short position in oil, and liquidating the long position in $. This is why during September settlement, there was vicious move to cover the “oil shorts” against $ index, with the result that oil prices spiked up by over $25 in a single day, and dollar slumped against the major constituent currencies like Euro. The contracts were rolled over to October/November by selling the Oil futures again, and buying the $ index. Euro weakened on the following day of its steep rise due to such roll over, and oil fell from $130 to $106 again in just under 2 days.

Another ENRON in the making, this time 20 times larger…
In short, Rubinomics is back. The banks used in these cases appear to be same old players who were and are close to the US administration – CITI, JPMC and BOA. The brokers are also same as before, Goldman Sachs except Salomon Brothers this time which has been bankrupted before in LTCM saga.


The similar situation will develop again with OPEC starting to control the spot market by curtailing production. They already reduced by 500,000 barrels per day. At least that part can not be controlled by the US institutions.


Both Rupert Rubin, former Treasury Secretary and Hank (Henry) Paulson, present Treasury Secretary, who just got the blanket authority to spend $ 700 billions whenever and wherever he wants with no questions asked or for any sort of accountability, are from the only surviving Broker – Goldman Sachs. It is obvious that part of this loot will go to his former colleague to cause the collapse of Oil prices and Euro, British Pounds, Commodity currencies like Aussie dollar, South African Rand, Canadian dollars and Russian ruble. This strategy was employed before while engineering Asian Monetary Crisis.


Myth & Reality of Oil Prices…

When the giant economy in corporate world or Central Banks (Fed in USA) or Treasury department, became very creative (manipulative in layman’s terms) in accounting, and they in the name of “financial engineering” go on inventing methods or products and use any means.

It may be noted that –

  • Oil prices started falling from July onwards. US$ too started climbing from July Onwards
  • The oil prices fall and dollar climbs (euro, GBP, Yen, etc falls) in beginning of the month
  • The position reverses on settlement day due to physical settlement requirements
  • This is why there was sharpest rise in Oil by $25 in a day, and $ fall steeply same way
  • After roll over into November settlement, the oil prices fell again and US$ rose
  • Many honest people believe that rise in oil prices Vs dollar was due to rising demand of oil from emerging economies like China and India. They also believed that recent fall in oil prices were due to fears of recession and demand destruction. These are naïve and puritan people who believe that the world is as pure as gold
  • In reality, we are living in a murky world. No real demand or supply – just paper trading of derivatives and futures – that determine the prices. The entire dollar and oil market is dominated by powerful nations in the Middle East and United States.
  • Off shore entities may have been used in more than 50% of cases to avoid any scrutiny. The funding of $ index is arranged by 3 of top 5 banks in United States

In my opinion, there was no reason for oil prices to go to $145 due to excess demand from China and India. Their consumption is a tiny part of what United States consumes. The prices were going up due to some nations’ collective efforts to punish the United States for its crime in Islamic world. Similarly, the recent fall in Oil prices and rise of dollar was due to the game of poker being played by United States.

 

Most of the Economists only know theories. They never had enough education on the front line of the markets. There is a saying that “Everything is fair in Love and War”. In today’s world, we are in the middle of intense financial war of unimaginable proportion. So do not ask any questions.

 

This is why Henry Paulson got the diplomatic immunity for spending $700 billions. It is therefore very likely that a man worth $700 millions, armed with $700 billions, with diplomatic immunity, and his dear firm Goldman Sachs at his service, the world may be facing lot of unexplainable conduct in the financial market like UFO in physical science. Expect huge manipulations.

Only yesterday, the strongman Arnold Schwarzenegger, the Governor of California, having found his budget delayed for several days, raised a demand of $7 billions before Paulson who has $700 billions in his kitty now.

He will ask – why would not you give me $7 billions for the worthy cause of managing my sunny state, when you are trying to pump in 100 times more into the bankrupt banks and brokers? If you can print $700 billions for them, why not print $300 billions more for the states for much desirable cause?


Kalidas,
Hong Kong
6-Oct-2008

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24 Responses

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  1. […] Financial Wisdom – By Kalidas added an interesting post on US – A Nation on the GrillHere’s a small teaser […]

  2. Sir,

    Great post. I admire you for the efforts you have taken in explaining with flow-charts and figures.
    Keep up the good work.

    I have a question: The oil prices and dollar manipulation is clear. But what is the motivation in
    controlling gold prices?

    regards,
    v8r.

    v8r

    October 7, 2008 at 7:53 am

  3. Sir ,

    You are raising the war against the most powerful men on the earth for the benefit of the society. Beating them by brain, you don’t’ need any body you are single man army. But have some z-security for your body .These guys are bad and ready to do anything to prove they are right. They have CIA ,FBI at their service.
    Please dont’ mistake me.

    Rgds
    Shiva

    Shiva

    October 7, 2008 at 8:54 am

  4. Dear Kalidas,
    Iam planning to buy Gold upto 50% of my Equity portfolio .
    In case the crisis finds a solution I would benefit from the rise in equities or else if the financial syatem fails I would make money through increase in Gold price.
    Am I correct here to assume either would go up in any situation ?

    Kalidas Reply
    Gold is certainly going to blow up on upside, and personally I would not be surprised if it moves up by $100 or 300 a day if major bank collapses.

    I would keep 30% of total investment assets into Gold and Silver ( I love Silver). However, at the moment I am more bullish on gold for few reasons – leas storage cost, higher demand from Central Banks, higher demand from Individuals for safe heaven when even treasury pays nothing, then why not Gold? and there is strong possibility that FED and Central banks do not have as much gold as they claim to have. And that, future reformed financial system will see more backing of gold to the paper currency. The era of low priced gold is effectively gone. This will be known when the demand will be made on the Authorities to sell the Gold when they will have to come out with the truth.

    Never keep entire investable amount in one item, even if it is Gold. I do not know how much is your portfolio, but Yes, Gold will make money under current circumstances, but it can not make that much money as the equity can make if you have bought it during most depressed period. The present market is very fluid and every one is sitting on huge losses. they are more willing to average down the price of their holding, so any good news will be used by them to invest more in equities. Kalidas

    Deekay

    October 7, 2008 at 12:27 pm

  5. Namaste Kalidasji,

    Great work!

    Thanks for the simplified explanation.

    Regards

    Girish

    October 7, 2008 at 4:27 pm

  6. Dear Mr.Kalidas,

    Excellent explanation and thanks.

    Regards,

    vanjeeswaran

    Vanjeeswaran

    October 7, 2008 at 7:52 pm

  7. Dear Kalidas, Excellent summery of events. I have two questions – Firstly, will USA be able to solve the problem or fail in its endeavor? Secondly if $ remains strong in relation to rupee, than will it not be prudent to wait till rupee appreciates before buying gold?

    Reply:
    All problems carry multiple soultions, one has to find it. Right now, all efforts of US to find root cause has failed ( I know it, and in fact wrote to President Bush (received by White House on 25/Aug/2008) that I can provide most comprehensive solution to the problems engulfing United States, and that if he did not take actions immediately, worse events may happen. You know that present chain of events started happening in September and now raising its pitch in October. My letter was very comprehensive in that I mentioned the summary of each chapter (problem) in my letter. May be I do not count in public life, so his staff ignored with very disastrous result.

    You make more money in gold in India if rupee remain weak. If the gold prices rise in US$ say, by 20%, and Rupee has gone up by 20%, Net Gain in Rupee will be almost NIL because while the price may rise in $ terms, price in Rupee terms may rise marginally or may even come down.

    At the moment the Gold is poised for very big rally (if and only if right actions are not taken by US) and rupee is also going down partly due to manipulated strength of $ as mentioned in the present article, and partly due to heavy withdrawal of FII from India who have been Net Sellers for the last few days in thousands of dollars. They have to sell rupee and buy $ from the market place. Government also foolishly want weaker rupee because the election is ahead and many politicians’ cash are in swiss banks in $ that will converted into rupee at higher rate.

    This is why at the moment, there is double engine for the price of gold – rise in price against $ (by 7% in last two days) and also depreciation of rupee by 7% recently that translates into higher price in rupee terms by 14%. Stronger rupee will hurt gold price to the extent of rupee appreciation.

    tally

    October 7, 2008 at 11:45 pm

  8. Thnx Kalidasji for the grt informative article..

    Am little confused bout GOLD..A report from Quantum Gold Fund said GOLD is always 14 times of CRUDE OIL on an average, from last 40-50 years. So if OIL is at 100 USD, GOLD should be 1400 USD… But now-a-days, evrything is manipulated and we dont know what will happen next.. The biggies make money and we, the naive innocent investor, lose everyday.. I feel if we dont have insider information, we shud not trade, long term investment and monthly SIP are the only ways to get our profits
    Thnx,
    Ojal Suthar

    Kalidas Reply
    You have to consider Gold to Oil ratio rationally. In normal cicumstances, the ratio may work, but there is no steadfast rule. In present scenario, the Oil prices rose from $ 70 to $140 in matter of months due to manipulation from Middle East countries versus dollar. When the oil prices were jacked up artificially twice, the Gold to Oil ratio no longer hold good. If the oil goes back to $70, then your ratio of 14 will give the price of gold to $980 against current price of $880. Please note that oil is manipulated against dollar. In 1984 or about, Gold rose to $ 800 and Silver rose to $50 before Hunt Brothers collapsed. that gave the ratio of gold to silver at 16. If we use that ratio, then silver prices sholud be $55 (present price about $11.35 only). The silver is most undervalued precious metal today. Once it runs, it will go to $60/oz. However, it is most volatile and dangerous metal to trade. I have been accumulating physical silver from $4.19 onwards (Average cost about $5) for over 5 years now and sold some when it was around $19. I am not selling any more. In fact, I bought some in last few days. What I am telling you that “ratio” is relative term – it is not a rule. Kalidas

    Ojal Suthar

    October 8, 2008 at 12:34 am

  9. Dear Sir,

    Great post. Its reveal many things. Thanks

    Rajmohan babu

    October 8, 2008 at 4:16 am

  10. Dear Kalidasji: Good work. Easy to understand. Everybody talks of the crisis and no one has given any solution. Why don’t you start writing your valuable suggestions for everyone’s benefit. Thanks & regards.

    Shanmukasundaram

    October 8, 2008 at 10:51 am

  11. Kalidas Ji what must an investor in indian quities do one do whose capital has eroded by 70%.

    – Should one buy more at this levels to average?
    Or
    – Should he sell, exit and book losses?

    victorjunior

    victorjunior

    October 8, 2008 at 11:33 am

  12. Dear Kalidas,
    I had posted a question to you yesterday. Would appreciate if you could respond.
    Also Iam sure that many like me would like to know from you what you advise should be the future course of action for working middle class indians wrto Equity Investments , Real Estate , Gold , etc.

    Deekay

    October 8, 2008 at 12:35 pm

  13. Hi Kalidasji
    A similar question to the one posted by others. If gold is bought in UAE now would it benefit or not. ALso what steps from US would lead to its slode and wise versa ?

    Xavier

    Xavier

    October 8, 2008 at 2:01 pm

  14. Dear Sir,

    Great articles to read from the day you have started the blog.

    best wishes
    Prabhjeet

    prabhjeet singh

    October 8, 2008 at 3:51 pm

  15. Dear Kalidas ji,
    Nice to read to analysis on the global economy at this point in time.

    But, I guess the readers would be very much eager to know how to invest now – whether to buy now, if yes then what stocks to pick.

    I myself have suffered huge loss … though your caution note in Jan 08 helped me make some good bucks … but then I have stupidly invested progessively during the fall since Jun 08.

    Infact my folio has now a 50% loss – should I avergae down?

    Qty Cost Price Mkt Price
    BHELTD 0 0.00 1452.40
    BONREF 200 87.00 43.10
    DECAVI 0 0.00 43.40
    DLFLTD 180 476.48 289.35
    GMRINF 250 119.49 69.95
    GOKEXP 100 252.83 100.00
    HOTLEE 600 55.07 22.30
    HUGTEL 2000 34.21 17.85
    ICIBAN 6 923.75 423.50
    IFCLTD 2600 73.92 30.40
    ISPIND 200 44.25 14.75
    JAIASS 180 160.28 91.35
    JAIHYD 100 56.75 36.35
    JCTLTD 850 9.44 3.46
    MAHTEL 0 0.00 70.25
    MUNPOR 0 0.00 386.90
    NAGFER 100 56.90 20.00
    NOITOL 100 41.45 24.60
    ORCCHE 30 321.10 188.15
    OSWCHE 100 50.75 13.10
    POWGRI 300 110.78 86.95
    RAJEXP 50 119.50 22.60
    RELPET 700 154.79 119.60
    RELPOW 41 263.00 135.10
    RNRLTD 160 96.12 58.65
    ROYAIR 900 25.35 15.95
    SPICOM 0 0.00 39.30
    TELDAT 500 22.15 7.40
    TVSSUZ 750 60.85 32.30
    UNILTD 100 175.03 90.15
    VIMLAB 50 204.75 27.75
    DABIND 250 91.70 85.15
    SICIND 400 19.85 6.10
    COMDIS 150 73.20 35.10

    Help if possible …

    Regds,
    King Porus (MMB).

    Kalidas Reply
    Oh my God! You have bought the whole market!. There are 34 scrips on your list. How many children do you have? 2 or 3 or 34? There used to be a slogan – Small family is happy family – or Laan kutumb sukhi kutumb during days of Indira Gandhi. That applies to even stock market. One should not have more than 12 stocks in their portfolio, because you lose the focus. it is more like shephard in charge of hundreds of animals pulling out in different directions.

    Do the following:
    1. Identify the stocks you want to keep (where you are comfortable)
    2. Sell the stocks where you have least loss (say 10%) and buy the desirable stocks where you have maximum loss (say 20% to 70%). By doing so, you are not investing new money, but just reallocating the existing money by booking the least losses and average down the costly purchases.
    3. Prune down the list to 20 first, and then in every rally, sell other undesirable stocks until the list is reduced to just 12 stocks.
    4. Do not fall in love with any stock and also never count the average cost. Treat every transaction as a separate one. For instance, if you have bought stock A at Rs 70 that has come down to Rs 30, and you are buying 3 times at Rs 30, then when the stock goes to say, 40, sell the 70% of new purchase at Rs 40 and retain the cash. Do not reemploy. If the sold stock comes down to Rs 30 or about again, buy back again with same amount of money. Example: you bought 3000 @ Rs 30 and the stock goes to Rs 40, sell 2000 at Rs 40 (realized 80,000) and hold the cash. If the stock goes to Rs 50, sell the other 1000 and if it comes down to 30 or about, buy back the 2700 shares (utilize 80,000). Do not count the average cost. This is the biggest mistake an investor makes.
    5. Manage the situation like this for other stocks without investing new money. When the market recovers from all time low by 10% in sufficiently longer time (say 3 months of more), then only decide to put in new money. The reason is that in bear market, it is easy to see jump in index by 8% in single day. That is not the indicator of rising trend.
    5. Treat each stock as Book Entry. This will help you avoid falling in love in any stock. Display your loyalty to your wife, children or pets, not the stock.
    6. Prepare a list of stocks held by you. Play a demo game, when you are unable to decide. This will help you sharpen your skill to understand the particular stock and its trend. Please note that catching the trend is more important than actual price you pay up.
    7. Do not try to buy the stock at absolute bottom and sell it at absolute peak. There is only one person in both cases.
    8. Also, do not keep “round figures” as your target. “Round figures and beautiful girls never come to one’s hand” When you want to buy at 8, try to buy at 8.10 and when you want to sell at 8, sell it at 7.85.

    King Porus

    October 8, 2008 at 4:19 pm

  16. Dear Kalidasji,
    some of the small investers already asked you what to do in suc falling market.

    Please try to put down few more word for us.

    Warm regards,
    Prashant

    Prashant

    October 8, 2008 at 5:07 pm

  17. Dear Kalidas,
    Was listening to George W Bush’s press conference yesterday on his visit to Illinois(not sure). He was sounding like a General readying for war discussing the financial bail out plan.It was quite amusing to watch him answer questions of the worried people present.
    But the best part was when he said that the time now is not for me to blame anyone but get the rescue plan going. I admire his guts (or is it his stupidity) to even think that he could blame anyone but himself of this mess.

    Deekay

    October 8, 2008 at 6:46 pm

  18. Dear Kalidasji,
    I have still not bought anything and i tell you it is only because of you i am what i am……….
    Great just great-
    To predict the failure of investment banks to predict this crisis way back in January.
    Maan gaye sir,
    but i have one grudge against you, when you disciplined yourself not to indulge in the stock markets just now. How come you got caught?
    I think GREED finally got you.
    A simple expalnation would be….. you are a human!!!! i almost had forgotten that.
    Regarding the blog i would say you are showing your true colours here. The MMB was a small playing field for you, here you can show all your colours.
    Great Sir Just keep it up.
    People like me will always be indebted to you.
    May god give you many more years of happy and peaceful life.
    Regards.
    Amarawargaonkar.

    amarawargaonkar

    October 8, 2008 at 11:41 pm

  19. Dear Mr Selarka ,

    Very constructive & informative articles on your blog
    and visiting your blog to increase my knowlege about
    depth of finance field .
    Completed professional degree in finance but do not find such practical knowledge in books

    ketan

    October 9, 2008 at 3:59 pm

  20. Dear Sir,
    There is one more blog on the net
    http://kalidaas.blogspot.com/

    Here we have all your old messages are posted. Such a great place to refer your old Gems. Is it yours or some one else has created?
    But I dont’ remember you telling in MMB about this.
    rgds
    shiva

    Kalidas Reply
    I have not seen that but one of the reader has written to me that he had started this blog as repository of my old posts that he has collected meticulously. The said blog was not started by me. In the present blog, there is “download” box where PDF file with improved formating will be found there for download. Try it out. I have used for trial use. – Kalidas

    shiva(shia)

    October 9, 2008 at 8:46 pm

  21. Tried asking you this question yesterday on MMB, but I since the message was not posted till today (9th Oct’08) am reproducing it here;

    liked your “A nation on Grill” article immensely. Keep writing…

    I have a question for you, today (8th Oct’08) oil closed at $88 per barrel (down by around $2), yet all three State owned refineries (HPCL, BPCL, IOC) went down substantially.

    Is the reason of this fall purely the reciprocation of the falling market (when market plunges, all counters without exception plunge) or something more than the obvious???

    Do you think another buying opportunity might present itself in HPCL, BPCL, IOC in the near future (discounting the pending November rollover for crude contracts)?

    I have taken sizable exposure to HPCL, BPCL, IOC almost 4 months back when crude was approaching its peak with full intention of holding on for at least 5 years (in-fact my notional gains had reached around 45% before falling back to around 25% today).

    Do you think the fundamentals are changing for these counters (in any way)?

    thanks and regards,
    Ashish Dandekar, Qatar

    Reply from Kalidas
    Kalidas Reply
    I must have missed your post or possibly may not have replied because I wrote at length how State Owned Refineries stocks like HPCL, BPCL, IOC would behave. These stocks have already outperformed the entire market by yards. When oil reached the peak of $145, I had mentioned that the SOE stocks were good long term investment for minimum 24 months horizone. HPCL came down to Rs 180 , BPCL to Rs 230. Even after the Sensex’s fall of over 35%, these stocks reached recently Rs 240 and Rs 380 respectively (up 30% to 50%) though they corrected only on previous day.

    Refinery stocks have inverse relationship to oil prices. If oil prices go higher, they go lower, and if the oil prices go lower, they go higher. The reason is these companies can not pass on the increased cost to the consumer due to price control. similarly, when the price falls, they benefit because they do not pass on benefits to consumers as fast as the oil [rices fall.

    On 2-Jan-2008 I wrote to one boarder as under:
    “I am taking the view that Oil prices are near peak and will come down to US$ 70 or about, because if there is a market correction, the money will flow back to US, which will result in demand for the currency, regardless the state of economy. If the $ rises, the oil will also fall. Also there is a perception that recession will reduce the demand for oil. Although India and China are major player for oil consumption, they are no way match for US for at least another 20 years.”

    I also wrote on 24-Dec-2007
    “HPCL/BPCL/IOC
    These trio are gem. I hold HPCL about 2K but my favored one is BPCL that I sold because selling BPCL gave me 33% more shares in same industry via HPCL with same valuation. All these stocks will quadruple in next 3 years. The Dec Quarter should be good, depending on how Oil bonds income accounted. These are the stocks for retirements. Oil price policy may change soon. Better than MRPL or RPL, though Essar Oil is in different category (like ONGC – Oil production + Refinery combined”

    When there is equity crash, there will be margin calls. and almost all large funds will run for exit. they are the holders of these large cap stocks, so they also come down regardless of fundamentals.

    You are witnessing the equity market crash today. In last 15 minutes, 500 points were wiped out. This is what I mentioned on 2-jan-2008 to one boarder:

    “Further, credit market is extremely bad, and in my personal judgement, we are steadily heading towards massive equity crash. A leading American bank and a large Investment bank in USA are near collapse and may wind up before January 2008 in spite of massive investment promised by Abu Dhabi and Singapore government by way of Convertible Bonds at very very high interest rate.

    With this collapse, there may be collateral damage to other banks directly involved with these bankrupt banks. Please note that “there is no Chapter 11 remedy applicable to Banks and Investment Banks, including Brokers. For them compulsory winding up is the only possibility under Chapter 7″”
    further…
    “You are merely looking at Indian markets, ignoring the tremendous risk developing at very fast pace in the world market, especially USA which will have immediate fall out in Europe and also arrive at India with full tsunami like force. Remember, while FED pumped in only USD 40 Billion in the system, ECB (European Central Bank) pumped in US$ 360 Billions and massive subsequent US$ 460 Billions in two trenches (Total US$ 820 Billions) clearly reveals that derivative risk has traveled outside USA with massive force and wreck the whole banking system.”

    Also in same post
    “The situation is extremely scary, and any rally now will be a good opportunity to raise the cash. Stay invested only up to 25% of your Cash in Indian equities. Do that before 26/1/08 as advised earlier.

    Forget Shah consult, forget Kalidas, forget Udyan or CNBC, and host of tipsters; and forget what FM,PM, RBI will say about IFCI and India’s prospects – we are heading towards massive equity crash. I am, for one, reducing my position from high flyers and will more aggressively before 10 Jan 08 ”

    This has what happened today. Tsunami struck today with massive force with no buyers on hundreds of counters.

    With regard to your mention that your gains of 45% has been reduced to 25% (that may turn into 10% possibly today when BSE opens today after yesterday’s holiday), I can only say that in very uncertain market you should go on booking profit for 70% of your holding, even if intention is to hold for 3 to 5 years. You can always buy back with same money large quantity than before. that opportunity is lost. I doubt very much these stocks will come down more because oil is falling that is big plus for these stocks.

    This is the last time, I write long reply over here. It seems that you did read my earlier posts while buying SOE companies as above.

    Kalidas, Hong Kong
    10-Oct-2008

    Ashish Dandekar

    October 9, 2008 at 10:38 pm

  22. The blog http://kalidaas.blogspot.com/ is started by me since I always expected that the earlier posts will be removed from MMB someday.

    Its a pleasure to read the earlier posts.

    shree_man

    shree man

    October 10, 2008 at 2:02 am

  23. Shreeman,
    Thanks a lot. Yeseteday I spent lot of time re reading these messages.It is indeed a great pleassure to read any thing Kalidasji writes.
    rgds
    shiva

    shiva(

    October 10, 2008 at 9:00 am

  24. Thanks once again for your indepth explaination to my query on state owned refineries.

    If a buying opportunity presents itself, I think I will buy more.

    And yes, I did readup all your earlier posts regarding these companies while I was researching prior to buying some 3 months back and am fully convinced that these companies are ‘investment worthy’ as opposed to mere speculatory (your analysis played a big part in convincing me).
    Thanks and regards
    Ashish Dandekar, Qatar

    Ashish Dandekar

    October 10, 2008 at 3:41 pm


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