Rakesh Saxena

Maoist Conflict Threatens Indian Stocks

Good debate, Mrudula-Uppai, though I'm not sure whether I want to engage in a political analysis in this forum. Both of you are making valid points.- Rakesh


On Oct 15 08:11 AM Uppai Mappla wrote:

> Mridula:
> My suggestions were based on painful experience. When I was young
> and green in the early nineties, I was in charge of allocating rice
> and wheat for PDS (i.e. rations for the poor) at Ministry of Food,
> GOI. Just a random example of the corruption among politicians: the
> wheat allocation to Nagaland (a remote north-eastern state) seldom
> used to reach them due to logistic reasons. FCI would report something
> like 20% delivery but Nagaland govt would claim 100% offtake! Then
> I received a letter from Nagaland CM addressed to Union FM demanding
> 6000 tonnes of additional wheat to distribute among the poor. And
> the Union Food Minister had scrawled on the margin "Allocate immediately."
> As a loyal government servant I was supposed to immediately issue
> allocation telex. But I had too much data. I dared to put up a note
> mentioning the anomaly and that previous month's allocation had never
> reached Nagaland. I linked and cross-linked all relevant files and
> papers. When the file came back after a day, the entire note sheet
> had been removed and full allocation had been approved again. The
> allocated (highly subsidized) wheat would never leave Delhi but would
> be distributed among rollar flour mills. I can give you dozens of
> examples like this.
>
> This kept happening in the remote north eastern states and states
> like Orissa, Bihar etc, where the poor were mostly illiterate. Now
> the poor have been aroused and they are asking questions the only
> way they know. I wish there were a Gandhi, not a terrorist to guide
> them.

Maoist Conflict Threatens Indian Stocks

Just by way of clarification, I am not "lamenting" anything. I am only trying to identify if the forthcoming government offensive will create concerns amongst foreign investors and, if so, to what extent. - Rakesh


On Oct 14 01:38 PM Uppai Mappla wrote:

> This Maoist uprising, bloody though it is, attempts to address in
> a crude way the terrible inequalities of rural India. It is a sign
> of the rising awareness among the oppressed. Kerala went through
> this phase 45 years ago and came out with a higher human development
> index and equitable distribution of wealth. The rest of India is
> now catching up. The poorest of poor have been kept ignorant and
> bonded by upper castes for centuries. But now the oppressed are hitting
> back and it is an irreversible process. The author laments that villagers
> are helping the Maoists. Let him ask himself why the normally docile
> villagers should set about derailing trains and killing officials.
> A wise government will not set the army upon them but address their
> needs which will bring them into the mainstream.
> Such aberrations will not affect India’s long term growth or cohesiveness.
> For the last 60 years, political pundits have been predicting doom
> for India at every tragedy but the reverse has happened. India is
> getting internally united and stronger than ever before. India is
> used to disasters, both man made and natural. India has survived
> the partition, Khalistan, Al Qaida, Hindu militancy, floods, earthquakes….
> If history is any guide, these are not going to affect the country’s
> economic growth.

India Risk Rises as Pakistan Unravels

Dear Juan77: I don't know of any short India ETFs--but perhaps you can search this site for more information on the subject or ask one of the SA editors. I could not agree with you more on the inflated asset values in India. Many thanks - Rakesh


On Mar 13 02:12 AM juan77 wrote:

> Hi Rakesh, thanks for another nice article.
> I think the word hyper inflation sums up the situation in India -
> because asset prices were super inflated fueled by hype!
> Are there any short India ETFs?
> I look forward to your articles ever since I read your article where
> you predicted(very correctly) that BAC would fall to $5.

India Risk Rises as Pakistan Unravels

Dear Aalan: You raise a good question, and I should make two points in reply. Firstly, given my fundamental view that systemic risk globally has not been contained, and will not be contained for quite a while, I am not inclined to buy anything at this point. Secondly, since my core business is default risk and index put insurance pricing, I am assessing short selling windows all the time. I am not a value investor, and I don't as a rule make long-term "long" recommendations. I trust that provides the clarification you are seeking. Many thanks - Rakesh

On Mar 13 01:57 AM Aalan wrote:

> I wish I could say that I found this article informative and helpful.
> However, every article I have ever seen by Mr. Saxena is a recommendation
> to short. Mr. Saxena, if you have written articles in the past that
> have pointed to long opportunities, please direct my attention to
> them so that I can get some perspective. Identifying "risk" is an
> important contribution; but why should I believe an analyst who says
> everything should be shorted, any more than I should believe one
> who calls everything a "buy"?
>
>
>
>

India Risk Rises as Pakistan Unravels

DevKumar: If you were to become Prime Minister of India, then I may have to surrender to the Indian police also. You are scaring me. Please show some mercy.


On Mar 12 11:59 PM DevKumar wrote:

> Loser PROXIMO
>
> Are you Rakesh Saxena ? why don't you surrender to Thai Police.

India's Budget Stimulates Votes amid Negative Growth

Dear Yamu: Current budget-gap target is 5.5% of GDP. But many analysts predict dramatic revisions once the elections are over. For example, one BJP spokesperson indicated the need to increase defence spending further, by at least another 25%. Many thanks - Rakesh


On Feb 17 08:24 AM Yamu wrote:

> Any number on the budget deficit? At least they're using the mones
> to stabilize their country and keep it together...

Emerging Markets: Millions Returning to the Natural Economy

Nothing wrong with returning to our rural roots, omooc. At least we would not have to worry about stimulus packages and TARP funds. Many thanks - Rakesh


On Feb 13 10:24 PM omooc wrote:

> What's wrong with returing to your rural roots? In China, a few years
> in the city allowed one to save some money, thereby allowing one
> to build a house in the rural area, and to return there from time
> to time. In the Chinese-language paper I read, I saw a photo, a couple
> of days ago, on the front page, showing the backside of a bicyclist,
> returning home, with a big washing machine (by Haier) at the back.
> The general attitude seems to be positive -- a few years in the city
> is nice, but returning to the rural home with your spouse and family
> is nicer. With simple tastes and no debt, plowing the field is gainful
> employment.

Emerging Markets: Millions Returning to the Natural Economy

Dear Proximo: FYI, my main business in a bull market has been merger-arbitrage type transactions, which provide the window to go long one one stock and short another. I am not a value investor (long term) because, since the early 1908s I have not trusted the accounting and disclosure in the marketplace. So I have focused on trading "misalignments", a bit akin to spread (pair) trading. Many thanks - Rakesh


On Feb 13 10:10 PM PROXIMO wrote:

> Rakesh---You have indicated that your preferred investment style
> is short sales. Just curious, if conditions improved, say, several
> years out and a bull market in stocks likely, would you still be
> most comfortable focusing on opportunities in the short sector? Or
> would you look to go long? Just curious---if you happen to read this
> comment. Thanks, PROX.

Emerging Markets: Millions Returning to the Natural Economy

Dear Kay: You are correct insofar as certain rural areas in these markets are dominated by foreign remittances, criminal gangs and aid packages. In that sense, the term "natural economy" needs to be contextualized in today's reality. Many thanks for your comment. - Rakesh


On Feb 12 02:02 PM Kay Moseley wrote:

> "Regeneration of the natural economy"? Would that it were true!
>
>
> Unfortunately, more and more of the countryside in the "emerging
> markets" now resemble rural slums -- dependent on purchased food
> and other inputs and thus on either some sort of rural wage work
> (including massive narcotics markets, here and there), remittances
> from relatives with urban or overseas jobs, or on "humanitarian assistance"
> (surplus food + foreign NGOs). This is why food prices, poverty and
> protests figure (as in the last paragraph of this interesting article).

Emerging Markets: Beware of the 'Head-in-the-Sand' Strategy

Your comments are appreciated. As far as "trusted" advisors are concerned, there are none now. All the so-called experts on Wall Street removed themselves from the advisor list when I started asking them to provide written answers (brief and pointed) countering or supporting my positions as evident in the articles posted here!! More on this subject later. Many thanks - Rakesh


On Feb 02 11:56 PM SeekingTruth wrote:

> Rakesh, If you keep all of this up , you are definitely going to
> be a candidate to add to my most trusted advisors list.
>
> The kind of insights that you reveal are rare and difficult to come
> by.
>
> Which raises the question, Who are "your" most trusted advisors that
> are in the public arena , and that the ordinary reader might have
> access to?
>
> An excellent article , not only substantive, but artfully done and
> a pleasure to read.

Emerging Markets: Beware of the 'Head-in-the-Sand' Strategy

Thanks for your comments David. I am getting to the possible prescriptions this week--Rakesh


On Feb 02 10:25 AM David Braunstein wrote:

> Wonderfully written! I enjoy your posts. After you make your fortune
> shorting stocks, please give us your prescription for the current
> crisis. The world needs the likes of you to help us all.

India Unraveling: Stay Short Emerging Markets

Thanks freefall51. As far as the market is concerned, it will be interesting to see how long this mini-bull run can go on in the face of clear and unequivocal facts to the contrary. Part of it, of course, is that most investors are fundamentally bulls, and issues like the Obama stimulus, auto bailouts etc are treated as positive signals--in my view, as you know, these rescue packages are actually bearish indicators. - Rakesh


On Jan 03 10:41 PM freefall51 wrote:

> Rakesh,
>
> keep going. I like your articles.
>
> BTW, I think the latest mini-bull is just based on a temporary lack
> of sellers after the recent tax loss sell-off and due to the fact
> that the indices hit a major uptrending support line. The market
> tries to sneak in an upswing on low volume. This is not logical to
> me given the overall conditions but the market proves me typically
> wrong.

India Unraveling: Stay Short Emerging Markets

Thanks freefall51. As far as the market is concerned, it will be interesting to see how long this mini-bull run can go on in the face of clear and unequivocal facts to the contrary. Part of it, of course, is that most investors are fundamentally bulls, and issues like the Obama stimulus, auto bailouts etc are treated as positive signals--in my view, as you know, these rescue packages are actually bearish indicators. - Rakesh


On Jan 03 10:41 PM freefall51 wrote:

> Rakesh,
>
> keep going. I like your articles.
>
> BTW, I think the latest mini-bull is just based on a temporary lack
> of sellers after the recent tax loss sell-off and due to the fact
> that the indices hit a major uptrending support line. The market
> tries to sneak in an upswing on low volume. This is not logical to
> me given the overall conditions but the market proves me typically
> wrong.

India Unraveling: Stay Short Emerging Markets

Dear HaavBline: In response to your question about infrastructure projects being shelved (rather delayed and delayed), part of the problem is that the machinery to implement many of them is simply not there; then there are those regular activist protests against dams and factories on rural land, rampant corruption, and vested political interests. When you put all that together, you can grasp the point: there are so many incomplete projects, that new announcements are meaningless, regardless of size. Many thanks - Rakesh


On Jan 01 10:49 PM HaavBline wrote:

> Thanks for a good report on a local situation. It is true the case
> in India could be happening in many emerging markets, however, different
> countries have different strengths and weakness, and will have different
> policy response and different capabilities to adapt to the sea change
> in global economoic environment. China, India, Mexico are producing
> countries that should benefit from sharply lowered commodity prices,
> Russia, Brazill, Middle Ease may suffer more.
>
> The Indian response about infrastructure spending reported by Rakesh
> puzzles me. Why are projects shelved when India needs to stimulate
> domestic spending? Why did India announce a paltry $8B stimulus package?
> (Why bother to announce it?) This seems to be very different policy
> responses from most other countries. India's balance sheet may not
> be golden, but as far as I know it is not in dire strait either.
> So I wonder what the Indian central & state goverments are doing?
>
>
> I agree about the Obama factor, market seems to WANT TO warm UP to
> the expectations of the big stimulus package. It probably will be
> announced soon after he takes office in late January, then we will
> see what happen. Market willl probably be dogged by questions about
> the financing and viability of that package afterwards.
>
> Another reader made a good observation responding to another article:
>
> From the standpoint of purchasing power parity (or considering PP
> differences in China & US), even a $1T Obama stimulus package
> will have somewhat less impact to the US than the $580B Chinese stimulus
> package will have to China.

India Unraveling: Stay Short Emerging Markets

Thanks Investor88. There is little doubt that the current behaviour of the equity and bond marketplace is contradicting extremely strong bearish fundamentals. And then there are the Obama bounces which are more than likely this month. It is indeed a difficult environment to trade short on leverage; but the bearish bias must remain intact. - Rakesh


On Jan 01 09:24 AM investor88 wrote:

> I salute Rakesk for not only giving logical well researched view
> but acting on it [short EEM]. There is now a flood of bullish calls
> for a turn around in 2009 [in SA, everywhere you look] -- on balance
> I place more weight on Rakesh's opinions unless the markets show
> otherwise.