BREXIT - Good Time to Buy?

Alchemist

Administrator
Staff member
#3
Today results are coming out for BREXIT. Is this the good time to buy on dips or will be more downside left?
I am not sure about the future at this point of time.

Firstly, the referendum is not politically binding and it may take many months before Britain actually exits EU.

The biggest risk at this point of time is that now people in other nations of EU and especially in the Eurozone, will make demands for similar referendums. If the Eurozone starts to break-up, there will be consequences for the entire world. Risk aversion will increase substantially.

Anti-migration sentiment is rising all over the world. In my opinion, Donald Trump's chances have also increased with this result.

I think it is wise to be a bit cautious now.
 

Alchemist

Administrator
Staff member
#5
How does it linked to the rest of the world? What kind of consequences do we see?

Please throw some light on the whole (big) picture. Thanks!!
It is a very complex issue and consequences are not easy to predict.

In my opinion, if BREXIT actually happens, then in the long term, EU will lose more than Britain.

There is already a lot of infighting in the EU and Britain's exit will give boost to right-wing and anti-Eurozone groups in entire EU.

Increasingly, Germany is being seen as a bully and that is leading to a buildup of resentment in the Eurozone.

My personal opinion is that this is just the start of EU's disintegration and over the next 5-10 years, the Eurozone will break up totally.

If the break-up happens in a planned and systematic manner, the consequences won't be felt much outside EU.

As far as equities are concerned, global markets are showing resilience.

India remains a growing economy and thus it is not unreasonable to expect positive returns from the stock market in the long-term.

Nifty's 10 year return is little over 10% and it has hardly out-performed fixed income. However, those who picked the right stocks and held on, have made a lot of money.

Stock selection will remain critical in future too.
 

Alchemist

Administrator
Staff member
#6
What kind of consequences do we see?
A Eurozone break up would mean:

1. Debt defaults. Some countries may not be even able to pay back 10% of their debt.
2. Borrowing costs would rise for almost all nations. Stagflation may also been seen in some countries.
3. Trade barriers and protectionism would increase. Various duties and levies would be imposed to discourage imports.
4. Labour rates would increase as free movement of people would be stopped.
5. and much more....

In short, costs of doing business would go ups and GDPs shrink.

Biggest loser would be countries like China who export a lot to Europe and countries that have large investments in EU.
 

magnet

Active member
#8
I plan to exit most of my holdings and sit on cash .Market PE has gone above 23. And seeing past three 8 years trend(from 1992 harshad mehta scam period) i expect a big fall or scam or event to unfold.
 

paran

Active member
#9
I plan to exit most of my holdings and sit on cash .Market PE has gone above 23. And seeing past three 8 years trend(from 1992 harshad mehta scam period) i expect a big fall or scam or event to unfold.
Whenever people start to expect something to happen exactly opposite happens, that is what market is.

Me too know this story of 8 year. I don't know about 1992 and 2000. But you can't compare 2007/2008 with 2016. From my point of view we are no where closer to 2007/2008 now.

During that time, all the donkeys were flying and Sensex reached to unimaginable level. But now we didn't even cross the 52 Week high. Like this there are many other things to compare.
 

Alchemist

Administrator
Staff member
#10
Whenever people start to expect something to happen exactly opposite happens, that is what market is.

Me too know this story of 8 year. I don't know about 1992 and 2000. But you can't compare 2007/2008 with 2016. From my point of view we are no where closer to 2007/2008 now.

During that time, all the donkeys were flying and Sensex reached to unimaginable level. But now we didn't even cross the 52 Week high. Like this there are many other things to compare.
You are right, things are not like 2007-2008 but the underlying economy is much weaker too.

In 2006-2007, every company was talking of robust future growth, every group wanted to diversify into infra, power, retail etc, everyone was looking for overseas acquisitions and expansions, every company was increasing capacity etc.

The economic environment was totally different then. That zeal is missing from the economy now.

Anyway, I applied for 2 lots from 2 accounts.
 
#11
Whenever people start to expect something to happen exactly opposite happens, that is what market is.

Me too know this story of 8 year. I don't know about 1992 and 2000. But you can't compare 2007/2008 with 2016. From my point of view we are no where closer to 2007/2008 now.

During that time, all the donkeys were flying and Sensex reached to unimaginable level. But now we didn't even cross the 52 Week high. Like this there are many other things to compare.
I dont understand one point, May be you can throw some light on my thought-
inflation is more then 10% since 2007-08
intrest rate around 9-10% since 2007-08
USD-INR moves from 45 to 67 from 2007 to 2016
Gold has same story
Property has same story

But if we look at our market we still considering market at 27800 as very high. I think with time we need to adjust the value of rupee as well.

In my view sensex at 50,000 in next 5 years will not make any difference as the value of rupee is gradually doing down. After 7th pay commission even a sarkari 10th pass employee is earning more then 50k per month.

Just think about it... market at 28,000 is still equal to market at 13,000 (2006) In terms of value of money....
 

magnet

Active member
#12
I know paran when what one expects opposite happens.

Anyways i am taking call seeing global scenario as well as my present business environment life looks much tougher than 2008 at least in my business line.I am into rubber raw material related to shoes-slippers(retailing whole-sale).

Also if something happens in CHINA our market goes down 4000 points.

Pictures are not rosy in EU side.Plus now BREXIT.

I think its right time to exit from stocks which are cap-intensive,heavily debt,low promoter holding and whose future depends more on export rather than countries market.

Anyways i too Applied for single lot from 5 accounts.
 

Atiker

Active member
#13
I know paran when what one expects opposite happens.

Anyways i am taking call seeing global scenario as well as my present business environment life looks much tougher than 2008 at least in my business line.I am into rubber raw material related to shoes-slippers(retailing whole-sale).

Also if something happens in CHINA our market goes down 4000 points.

Pictures are not rosy in EU side.Plus now BREXIT.

I think its right time to exit from stocks which are cap-intensive,heavily debt,low promoter holding and whose future depends more on export rather than countries market.

Anyways i too Applied for single lot from 5 accounts.
Magnet, Paran, same mixed feelings about market here too.

I guess for those investing for retirement, this is the right time to clean up the portfolio of any crappy stocks which one got into and didn't have the nerve to get rid of. If the rising tide is raising all tom dick and harry get rid of laggards.

For me, SIP returns from equity MF have been very good when compared to debt and taking into account tax implications. Direct equity have been a disaster for me due to buy, hold and forget strategy.
 

ramkasi

Active member
#15
:stoned:micap at 33 times 1 year f/w and small cap at 65 times 1 year f/w, we must be very carefull now :bandit:, thanks for the post adminjee.

ram
 

Atiker

Active member
#16
:stoned:micap at 33 times 1 year f/w and small cap at 65 times 1 year f/w, we must be very carefull now :bandit:, thanks for the post adminjee.

ram
And nifty 50's pe is 23+

Just wondering
Last week
Brent Crude approx 10% down Gold 1% up, at all time highest in INR.
And the market is going up up and away

Daya, kuch toh gadbad hai (Daya, something is fishy)

Will crude and gold reverse or the market, is anybody's guess.
 
Last edited:

Alchemist

Administrator
Staff member
#17
And nifty 50's pe is 23+

Just wondering
Last week
Brent Crude approx 10% down Gold 1% up, at all time highest in INR.
And the market is going up up and away

Daya, kuch toh gadbad hai (Daya, something is fishy)

Will crude and gold reverse or the market, is anybody's guess.
For now, everybody is just focusing on one thing - GST.

I feel people are going long on hope that markets will rise sharply when GST bill is passed and they will sell and make a good profit.

The effects of GST will be felt after many quarters, but market wants to discount everything now.
 

Atiker

Active member
#18
I feel people are going long on hope that markets will rise sharply when GST bill is passed and they will sell and make a good profit.
I too got the same vibes from the general public.

If there is a consensus, it usually means everything is already discounted in the price. Historically the market has been consistent in removing the gas from "consensus".
 
#19
all ...hoopla ,,,created by Media..

All this XXX-Exits is "hooopla" ...."timepass" ..."print and web filling" articles..by the media,,,

First it was..Greece...ohhhhh heavens will fall...
Recently Raghu Exit....ooops FDI will vanish...lololol
Now Brexit.....forex impact...blah blah.....

Europe (as a whole or parts) does not matter in the world economy today...

It is only
- China.
-US.
- oil price impact.

which can impact india a bit....rest all is hoopla for the media..

Imagine resignation of an RBI governor being made an issue...it shows the illiteracy of the people which is reflected in the media.
 
#20
I couldn't believe honestly that brexit is like 3 years old already and Johnson are the major, correct ? I simply do not tracked how fast time flies with everything really needed there. Do you see my point ? What is the catch everywhere ?
 
Top