Rajiv Sethia

11 Comments

    • ICICI Bank: Boring Business, Compelling Valuation [view article]
      ICICI bank holds a huge loan book of money lent to real estate buyers in India. Real estate is a big bubble in India, with a non-transparent pricing, corruption with bureaucrats and builders, and prices of both commercial and residential properties are approaching or are already higher than those in Western Europe or North America. This makes little sense for the poorest countries in the world. When these loans go bad in the next 3 to 5 years when the bubble pops, no one knows who will come to ICICI bank's rescue.

      This is a time bomb waiting to implode. My 2p.
      Sep 26 07:39 PM
    • Tibetan Unrest and Economic Implications: 'Nancy Pelosi's War' [view article]
      What's this got to do with seekingalpha or investing? What happened to the editorial policy? We all have political views & while I for one would support the Tibetans but suspect this just dilutes the site to another one of many political blogs written and read by those who have too much time on their hands. Mar 27 11:48 AM
    • Invest Globally, Not Just Locally [view article]
      Just to add to the fine commentary above - we should not forget these are volatile markets that are still at historical highs despite the recent correction. The bracketing of these together is a myth spread by Goldman that the popular media has been quick to jump on. Each of them is a completely different animal: considering politics, the economy, and the stage of human development. Despite a common market uptrend in the past decade these do not share much else with each other - which may be a good thing as uncorrelated markets are difficult to find.

      The "demographic inevitability" isn't inevitable, just as it wasn't for most of the two centuries prior to the last 20 years. Weak institutions, fickle economic policy, political challenges, societal strife (particularly India and China) and governance issues can still trounce sound economics quite easily in each of these countries. Exchange controls over capital flows make true asset pricing difficult. But I do agree with the author that these may represent good diversification opportunities for a mainly US based portfolio.       Mar 27 11:35 AM
    • Spitzer: Self-Destruction [view article]
      What's this got to do with SeekingAlpha, or investing? Is scandal mongering in line with the editorial policies for this site? Mar 11 05:18 PM
    • India is Thirsty for Energy: Will the Bulls Take Notice? [view article]
      The $3bn Reliance Power IPO (=10.1% of the company) last month in Mumbai was oversubscribed 73 times. (The IPO price was Rs 450, now at Rs 375, but the company announced a "bonus" issue of 3 shares for every 5 held to only the IPO allottees to take care of the losses on listing). Ticker is RPOWER.NS, but US based investors cannot invest. Mar 06 09:48 AM
    • Intel, Google, Apple: Valuation Anomalies To Consider [view article]
      Hey, cut the guy some slack, all he is saying is that these companies are trading at one of their lowest P/E multiples. And it is interesting to see what the price was when they last traded at those multiples. Not that it is terribly relevant but it certainly is interesting as it points out how far in the past that was, and how far these companies have come in increasing the "E" so that the lowest multiple now has a significantly higher price than in the past. Mar 06 09:20 AM
    • India’s Labor Arbitrage Strategy [view article]
      Sramana, you are absolutely right. There is no innovation at the big Indian names, they treat their employees quite poorly despite the golf courses and the swimming pools on their campuses (that you never see a single person using). They are body shops - one and all, Infy, Satyam, Wipro, all of them. "Sir, can I place any people please on your project? Only 35 dollars on site". Narayan Murthy and all the other superstars, they are no different than fat cat labour subcontractors, that is the reality. Bitter it is, but that is what the facts are. Mar 05 04:20 PM
    • Some Muni Bonds Appear Screaming Buys Here [view article]
      Which ETFs or ETNs invest in AAA muni bonds? I know I can find out with a bit of research but if someone knows do put the ticker symbols in.
      Mar 02 10:33 AM
    • Inflation's Power: The Dollar in 25 Years [view article]
      This problem is universal, not just in the US, causing an unnecessary and undesirable redistribution of wealth in society. When people lose faith in money as a store of value, they will run to commodities, gold and other such stuff. Inflation should stay really low. Feb 29 10:48 AM
    • India's Exploding Real Estate Market: Shades of the Florida Condo Bubble [view article]
      10% growth, 15% salary growth, top 1% making more than $200k - none of these arguments justify the prices that we see in India. No matter how you look at it, India is still an incredibly poor country. On America's east coast, every tom dick and harry you see on the train makes more than 200k. 8.5% of US households have a networth (net - ie after deducting all loans) exceeding $1m, and 1.3% with wealth exceeding $2.5m. Still that does not cause New Jersey land prices to come even close to India.

      There are serious short term factors at work here - the lack of good title to properties is a serious problem, for example, you can't think of buying a property in most of Karol Bagh, Chandni Chowk, west Delhi, much of South Delhi too because you don't know how many claimants are there to the title. So you can only go to the new developers like Ansals, DLF and others that give you a clear title. There is certainly a demand unmatched by supply as houses can't be built overnight, but supply is responding to the demand & it remains to be seen what happens in the next 3-4 years. Increasing urbanization is a factor but I don't believe the rural masses moving to the cities are bringing the kind of money these houses demand.

      There is another issue I am still unsure about. In the US, foreclosure laws are well established and the procedure is followed. In India, if you default, and if the lender takes you to court under civil law, he has no choice but to wait for 5 years for the case to come up for first hearing. So it will be interesting to see how that one unfolds when people start defaulting (which is statistically inevitable, no matter how rich India is compared to the US ;-), as is the argument I have heard made by some.

      But one can analyze to one's heart's content, the market is what the market is, and the fact is that these are the prices. In 2004 I looked at an apartment which then was 1 crore rupees in Noida near Delhi, and today is more than double that. If I wish to buy something I would be comfortable with for my family, that would currently cost nothing less than half a million dollars. I don't know how the guys in India manage that kind of money, or the courage to take on mortgages whose monthly payments are in the $3k a month range with an Indian salary. Someone I put this question to said there is no dearth of the newly rich who work for Infosys, Daksh and many others and whose share options have made them dollar millionaires. Maybe I & Anshu missed the boat. Ten years ago when I was in Thailand I was shocked to see million dollar condos there - maybe these prices are par for the game in developing countries. The bubble may just stay the same or shrink a bit instead of bursting because when prices go down, the property markets just become shallow and deals stop happening, and declines will only happen by the effect of inflation while nominal prices hold. Who knows.       Feb 13 10:33 AM
    • India's Exploding Real Estate Market: Shades of the Florida Condo Bubble [view article]
      There is going to be a lot of pain when this is over. There are more high income earning people in New York/New Jersey than there will be in Gurgaon/Noida in the next 50 years even with double digit GDP growth, yet New Jersey is far cheaper than any place in India. It seems unsustainable so it must stop. The only NRIs who can afford apartments in India now are the i-banking/private equity/hedge fund types, the regular IT guy or the doctor or the engineer doesn't stand a chance of sparing half a million dollars I am sure. Yet, I have been proven wrong in the past and I don't believe my own forecasts anymore - I did not buy in 2004 when it looked similarly overpriced, and today things are just unaffordable. Certainly the market knows something I do not, and I am certainly not wiser than the market. Feb 13 04:23 AM
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