Vikram12

9 Comments

    • ON: Tue Jul 29th 22:20 PM
      Commented on:
      Stock vs. Bond Valuations
      nice analysis. wonder how this chart would look if financials are excluded from S&P 500... Is it the huge -ve earnings from financials leading to a closing in the valuation gap?
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    • ON: Wed Jul 23rd 04:06 AM
      Commented on:
      India's Strong Growth Should Continue
      sooth_sayer---US housing was built on the concept of MBS (mortgage backed securities) Spending habits of average Americans and high standard homes and artificially high prices to start with was all a game for banks to be angels of capital .... this led to leverage in US homes... this time structured products failed.... tell me how this is going to happen in India? US housing might start to rebound as soon as the inventory due to foreclosures reduces.... thts a good point u made abt Japan being very dense... i looked up at the population growth and demographics of Japan over the years .... Japan's population was 121 million in early 80s and is abt 126 million now and is expected to decrease in the future... moreover the percentage of young ppl declined in Japan over the years... Japan witnessed huge rise in population during the 50s through 70s... with this aegaing population japan has a huge burden... I am not sure how this translates to housing but makes some sense to me... the point I am making is these are diffrent markets driven by difrent fundamentals... the recent US crisis is more of a structured finance failure it is more of a risk return failure... there are only 2 things we do in finance either we find the price or estimate its risk if we mess up any of the 2 then thers a problem... in case of US it was the risk return problem.... Having said tht i agree with you abt infrastructure I love these homes in Illinois and Wisconsin they are much beautiful than Indian homes....
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    • ON: Tue Jul 22nd 18:46 PM
      Commented on:
      India's Strong Growth Should Continue
      Land prices have gone up anywhere from 100 times to a 1000 times in the past 20 years in India.... Have you seen how the rupee has depreciated against the dollar over this period. Even though the Fed was recklessly printing money the doller gained in value.... every thing is relative in this case.... If Indians declare the amount of household gold they hold the rupee will appreciate like crazy and if we just let us assume tht the fed has to repay its investors then the dollar is worth a tissue papper
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    • ON: Tue Jul 22nd 18:39 PM
      Commented on:
      India's Strong Growth Should Continue
      sooth_sayer-- You seem to be jealous with asset price increases outside America... If You have been to India you can certainly notice how much potential increase in infrastructure is still possible. And by the way there is shortage of land in places like Bombay.
      you said "Nothing could be said to justify that, when you compare incomes, infrastructure and quality." i kind of agree with the point you make on infrastructure but you must not forget tht India has the most competitive manpower in the world and comparable to America... Your second point on income is incorrect because India has more increase yoy in real income than America. Americans have large spending habits whereas Indians are more conservative. And you seem to ignore the point i make about unaccounted equity which drives Indian housing market... There might be a correction in asset prices in India but you will not see foreclousures and building up of inventory which has been the case in America.....
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    • ON: Tue Jul 22nd 04:32 AM
      Commented on:
      India's Strong Growth Should Continue
      sooth_sayer - My point was - it is the concept of unaccounted money which drives the indian hosing market... i agree tht its percent as a whole has declined but still contributes a huge chunk... This is not the case with the present american crisis which was due to the birth of cheep money during the greenspan era which led to money flowing into real estate through exotic options or structured products. American husing bubble was a classic case of FASB not being able to catch up with financial engineering... Japan's housing boom was also led by cheep access to financial leverage... You may be right on the end result of a housing price deflation in india but the reason for the deflation do not look similar to tht of Japan or America...
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    • ON: Mon Jul 21st 21:45 PM
      Commented on:
      India's Strong Growth Should Continue
      DragonSlayer you need to get your concepts right... You just seem to be making a fool of yourself by stating India is a socialist country.... India has the oldest stock market in Asia and very good access to capital...If the increse in no of companies going public means socialism to you then you are confused bro... and may I ask which asset bubble are u refering here? Real estate ? stock markets? real estate can never go down in india bcause real estate is puchased through significant ammount of equity in india and not through leverage as supposed to America....stock markets will continue to well as along as we have sustainable economic growth which no wise person can deny in case of India.... for gods sake forget grammer and concentrate more on finance concepts....
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    • ON: Sun Jul 13th 15:51 PM
      Commented on:
      Beware of Sending Fannie and Freddie Stock to Zero
      Let me introduce the concept of distressed equity valuation. The equity holders are valued as a call option with face value of debt being the strike and weighted average duration of bonds being the maturity of the option. Even if market value of assets are less than the face value of debt, the equity does not trade below zero. the assets = liability + SE equation... A simple concept which says equity holders are liable to only the ammount of equity invested. This is because the underlying asset which is the firm has volitilty and the debt has time till expiry which increases the value of the call option... Investors look at distressed corporations this way... These companies cannot turn zero so fast unless there is a complete liquidation and the concept of a ' going concern' is defeated....
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    • ON: Sun Jul 13th 15:40 PM
      Commented on:
      Beware of Sending Fannie and Freddie Stock to Zero
      Let me introduce you to a concept called distressed Equity valuation. Equity of distressed companies are valued as call options with strike being the face value of debt, and maturity being the weighted average duration of debt. Even if market value of assets are less than the face value of debt corporations have possitive stock prices. There is nothing called zero stock prices unless liquidation... Since assets are volatile call option prices will comand some value till the debt maturity is due.... Zero is not going to happen so soon....
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    • ON: Tue Feb 26th 01:38 AM
      Commented on:
      Visa IPO to Help Recapitalize U.S. Banks
      Visa would benefit from increase in money multiplier and money supply and also capitalizing on the potential increase in usage of plastic money. they account for about 10% of global consumer spending. do not see how recent defaults can dent valuations of visa. As long we have a justifiable projections in terms of growth valuations should look justified... their consumer debit volume is much as consumer credit volume in the US and still picking up in developing countries... how can we forget cash from ATMs they also account for a huge volume..... if there happens to be a slowdown in credit there is a huge potential in terms of debit transactions outside the US which dwarf the credit volumes......
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