r2i forum

1999 is wrong time to pick for US stock market that was the peak which hung on for almost 2013 I think...Nasdaq may still be lower than its peak I think.

How about we pick 1980 or 1970 or 2010 even 2002 maybe a better comparison.

Warren buffet's best time were until 1999. After that he is just like any other investment in western world, swinging up and down.
http://www.businessinsider.com/warren-buffett-berkshire-hathaway-historical-returns-2015-3

[QUOTE] That $1,000 invested in 1964, when Buffett took over the company and shares cost just $19, would be worth about $11.6 million dollars today


India's massive returns maybe over.....it may start to behave like a mature markets of western world.

The only comment I would make is that if you are a US resident and want to invest in Indian mutual funds, your best option is probably to buy a US based Indian ETF (like some of the iShares ETFs). If you invest directly in Indian mutual funds, you are subject to onerous PFIC rules.

greyfri;627195The only comment I would make is that if you are a US resident and want to invest in Indian mutual funds, your best option is probably to buy a US based Indian ETF (like some of the iShares ETFs). If you invest directly in Indian mutual funds, you are subject to onerous PFIC rules.

Personally I would stay away from investing USD in Indian stock market, unless one happens to be very sure about individual stock where they expect tremendous gains.

Reason is based purely on valuation metric. Given that inflation/interest rate in India is around 7-8%, stock investment should yield another 4-5% since it is more risky than FD or RBI bonds etc.

Which means stock should yield 12-13%, which means their PEs should be lower than 7.

Last time I looked I could not find a big market cap company, with good balance sheet and business model, with PE less than 12-15.

It's a momentum market, not trading based on valuation. Maybe, their earnings will grow a lot and they justify their current valuation. Maybe interest rate in India will also fall below 2%.

Buy if we are counting on interest rate falling, we are better off buying bonds....the gains will be huge if rates fall from 7-8% to 2-4%.

techynt;6271311999 is wrong time to pick for US stock market that was the peak which hung on for almost 2013 I think...Nasdaq may still be lower than its peak I think.

How about we pick 1980 or 1970 or 2010 even 2002 maybe a better comparison.

A Financial Journalist picks a period of time to make a point. I have no problem as long as it is longer time frame which includes recent period.
If you think another period would come out with different conclusion, please show us. Without studying a period we can't speculate the outcome.

greyfri;627195The only comment I would make is that if you are a US resident and want to invest in Indian mutual funds, your best option is probably to buy a US based Indian ETF (like some of the iShares ETFs). If you invest directly in Indian mutual funds, you are subject to onerous PFIC rules.

For r2iers and people living in India, with US connection, PFIC is additional cost. With tax credits and FEI exclusion, the impact of PFIC is lower than imagined.
Anyway an investor should compare after tax return on investments and not to get biased by perceptions and imaginary returns.

Buying an Indian ETF is not same as investing in indian mutual funds. FII don't get several mid cap, small cap stocks to invest.
Even companies like Maruti or HDFC becomes unavailable to foreign funds at times due to FII restrictions in individual company stock. Most of the time only an FII can buy from another FII.

techynt;627196Personally I would stay away from investing USD in Indian stock market, unless one happens to be very sure about individual stock where they expect tremendous gains.

Reason is based purely on valuation metric. Given that inflation/interest rate in India is around 7-8%, stock investment should yield another 4-5% since it is more risky than FD or RBI bonds etc.

Which means stock should yield 12-13%, which means their PEs should be lower than 7.

Last time I looked I could not find a big market cap company, with good balance sheet and business model, with PE less than 12-15.

It's a momentum market, not trading based on valuation. Maybe, their earnings will grow a lot and they justify their current valuation. Maybe interest rate in India will also fall below 2%.

Buy if we are counting on interest rate falling, we are better off buying bonds....the gains will be huge if rates fall from 7-8% to 2-4%.

This is the classical mistake made by investor who invests only in developed markets.

You are bringing your cricket skills to football. You think both are ball games.

Emerging markets are very different. If you are waiting for good PE valuation to invest in India, you will never buy anything except PSU banks.
Even private banks have rich PE valuation.

Does it make India a bad market to invest ? No, you bring wrong scale of measure.

Even FMCG companies in India run to valuation of 50+. Will you ever invest in a consumer staple company at that valuation?
Probably you will give such valuation to internet startups!

India is growing market. Some use PEG for valuation. That is much better than using PE standalone.

You also commented about buying bonds to make money. We all know the theory.

Have you done trading in bonds in secondary market in India? What bonds will you buy and how will you make money?

Explain in practical way, how it works in India.

Sorry I have not done any bond trading in India so not sure how it works there.

Only time will tell when all those PEG really translates to good Earnings to justify the sky high valuations. I dont know much about Indian conditions to be able to anticipate big growth hence I can use only value investing formula.

BTW, developing markets are high risk investments, IMO, we just need to look at all those BRICS returns from past few years to know how badly those investment fell on its face.

RRK;627264This is the classical mistake made by investor who invests only in developed markets.

You are bringing your cricket skills to football. You think both are ball games.

Emerging markets are very different. If you are waiting for good PE valuation to invest in India, you will never buy anything except PSU banks.
Even private banks have rich PE valuation.

Does it make India a bad market to invest ? No, you bring wrong scale of measure.

Even FMCG companies in India run to valuation of 50+. Will you ever invest in a consumer staple company at that valuation?
Probably you will give such valuation to internet startups!

India is growing market. Some use PEG for valuation. That is much better than using PE standalone.

You also commented about buying bonds to make money. We all know the theory.

Have you done trading in bonds in secondary market in India? What bonds will you buy and how will you make money?

Explain in practical way, how it works in India.

Unfortunately I dont have access to a tool which would go back to 1980s, the golden period for US stocks were from 1980 to 1999.

according to google finance, S&P gained around 1000% during that period. From 2000 to 2013 it was almost flat.

Either way, my only point is, only thing that matters is future. Hindsight bias is not good for investing.

BTW, future maybe good for Indian economy since oil prices are supposed to remain below 60 for a long time. Not to mention most commodities are also down since a while and appear to remain down for some time. These were the major headwinds to resource poor Indian economy.

RRK;627261A Financial Journalist picks a period of time to make a point. I have no problem as long as it is longer time frame which includes recent period.
If you think another period would come out with different conclusion, please show us. Without studying a period we can't speculate the outcome.

techynt;627275Sorry I have not done any bond trading in India so not sure how it works there.

Only time will tell when all those PEG really translates to good Earnings to justify the sky high valuations. I dont know much about Indian conditions to be able to anticipate big growth hence I can use only value investing formula.

BTW, developing markets are high risk investments, IMO, we just need to look at all those BRICS returns from past few years to know how badly those investment fell on its face.

It is wrong to associate high valuations only to emerging markets. Even in USA, companies get to very high valuations, and people still make money. Apple, google, several internet companies in dot com era are examples.
Also cheap PE does not mean low risk. A company that is going down before filing for bankruptcy also will be available at cheap PE.

BRICS is stupid idea, and coined by some greedy investment manager to create a fund and sell it as an idea. I am only talking about Indian market and does not want to get into BRICS debate.

Indian stock market returns are mainly influenced by FII money. I believe they are smart with money, I guess they use all the valuation parameters that we are talking about. Why not these guys keep all their money in USA?
Why take emerging market risk?