Markets zooming back

 What's driving the market? Long term head winds still remain there but markets have zoomed back to 21 PE

Advise 

1. Staples

2. High Yield bonds

3. 2 wheeler 

Researching Zomato a lot, hope to see the level of 35 for me to jump in 

Where are we right now in terms of market cycle?

Globally - The last quarter of the US is negative GDP growth  

US is about to enter into a technical recession as last quarter was negative GDP growth and this quarter may again be negative

Is India decoupled significantly - Yes to a large extent but some sectors are strongly coupled such as IT

1. Young population
2. Consumption-driven economy
3. Large RBI chest - If RBI doesn't defend INR

So, everything depends on how fast the mop-up of liquidity happens by regulators? The froth of liquidity is still very high. So, what are good indicators of this speed? 

Leading indicators, not lagging indicators - -Keep a tab on Fed Balance Sheet as well as other important global peers

Which sectors will be bad to enter into ?

Discretionary (high beta) - Banking, IT, 4 wheeler

Good to enter

1. Consumption - 2-wheeler, staples 
2. Value-Oriented sectors - Pharma, Energy, 

If inflation still remains out of control - Gold is good insurance against global turmoil

Demand for real estate will definitely go down with the recession but part of this will be countered with the inflation froth

When will redemptions of SIP start happening?

 Retail investors have been holding hard by continuously pumping in money when the FIIs have been withdrawing in FY 21-22.

FII flows started a negative trend started on Oct 21 but the DIIs were on an upward trend. Hence, the market has not gone down substantially. 

But the cracks in the DII story has started, 

 

The first to be impacted will be the Non-MF DII Inflows. These are basically retail investors, who are directly investing in the stock market by buying shares.

 

These are basically inexperienced people catching a falling knife

 

They have done buying at very high valuations. They have already burnt their fingers. They will basically start evaluating their returns and perhaps will start panic selling about 1 year from the highs of say Oct 21. So, that panic selling may start say around Aug-Sep.

 

But the real question is when the redemptions in SIPs will happen. Experts say – Never.

But the cracks already started in the SIP story as the May 22 inflows are lower than April -22.

Update - FII are again net sellers this week

https://www.indiainfoline.com/article/news-top-story/weekly-round-up-of-indian-equity-markets-122062400140_1.html

Keep a tab on the volume of transactions in market - Especially ratio of Retail / Institutional transactions

Nifty PE at 18.92 - just moments away from my Aha moment

 

 I have been sleeping and yawning for a long time, but have become very busy for the last 1 month. 

All my triggers are now sending me emails and alerts - WAKE UP LUCKY, IT's TIME TO WAKE UP

 

Yes, PE has gone closer to my target range for long-awaited market entry. 

2013 – I was out of India and busy with hectic international travels across Asia. My only engagement outside the family in India was AAP moment and supporting the volunteers on the ground

 

2016 – I shifted to India and was busy with the hustle

 

2020 – It happened so fast that I could not make my Hypothesis for investment

 

This time around I am totally free and eager to get my hands dirty

Questions - How long it will take the US to mop up the money back? Interest rates are required to be significantly higher than the inflation rates. 

If the interest rates are increased significantly 

Debt - Huge MTM losses (long-term debt will be loss-making as interest rates will go up)

Gold - If inflation cools down then it may go down but for the moment, it seems unlikely that inflation will decrease soon, so gold may remain inflated for some period

Real Estate - May stay inflated for a longer period as mop-up is not so easy 

Excess liquidity has to settle somehow - The question is speed and speed is decided by regulators not the markets, so bottle cap tightening is out of market scope

Portfolio Plan with PE at 20

 PE = 20, https://primeinvestor.in/nifty-pe-ratio/

market may have a trailing effect 

My threshold is 18-19 to touch equity, but I have to start somewhere, 

so I will begin my build-up game

Where to start? 

Index-linked direct plans, as I don't have time

Debt 

Indian Railway Finance Ltd                          7.61%

National Savings Certificate (VIII Issue) 6.80%

SBI Regular Income Corporate Bond            6.34%

5 Year Time Deposit on Indian Post          6.70%

Kisan Vikas Patra​​                  6.90%

Indian Oil                                                        6.14%

Source - Bondskart.com

House of Cards - USD

Printing ......Printing............40% USD printed in just last 1 year.......

I thought Obama had a poor legacy of the great financial recession 2008 and had gone to deficit of 500bn and then Trump had his own unique ways of doing things and pushed the US deficit to $800, but it seems the Biden Administration is no mood to stop the spending. 

We are currently into a globalization trend where the US keeps on printing USD and the India/China of the world keeps on serving and providing goods in exchange for these USD.

What kind of strange system is this?

This is pure nonsense for the India/China of the world to buy more USD. 

But guess what, still 60% of world reserves are in USD 

Are things changing

1. BTC getting legitimacy 
2. China has already called on the US blackmail and so will India, sooner or later
3. USD share in the reserves will decrease

Will this change be fast enough?

It depends on what Biden does but it any signal will lead to sudden bursting of the bubble and depreciation of USD

Key Triggers to watch for

1. China / India to look for other currencies
2. Digital Yuan acceptability
3. Sudden increase in gold prices or commodities

Uncommon Common Sense from History

History is full of case studies related to evaluation of common sense starting with Hummarabi code to the present day Machine Learning. However, there are some notable cases, which have deep influence on me. 

The earliest documented interrogation into common sense is from Socrates Questioning. One of student, Plato documented this method where his teacher would assume a role of an ignorant mindset, in order to compel the student to assume the highest level of knowledge, through 

1. Acknowledge Contradictions
2. Recreate Inaccurate or unfinished ideas
3. Critically determine necessary thoughts

This interrogative technique leads to following 2 important concepts

1. Basic Knowledge = Fundamental Concepts + Principles + Theory + Issues + Problem 
2. Attaining Knowledge = Systematic + Disciplined + Deep Evaluation

When it comes to common sense, it is hard to miss out on Thomas Paine. He wrote 2 very interesting pamphlets in 1770s - the Common Sense and the American Crisis. Almost all his writings are captivating and as historian Greene once said - "Fundamentally, we are all children of Paine" 

Indeed the late 17th century provided one more important relevance from Benjamin Franklin, who developed - "Balance sheet of Decisions" which is crude form of "Risk Probability Matrix", which we use frequently in consulting.

Common sense has been applied to even most obscure subjects such as sociology, which is one of my favorite subjects. It is really a pleasure to read Emile Durkheim, Mead, Talcot Parson etc and observe how they deduced common sense on complex social interactions. The same concepts have been illustrated in "Art of War" by Sun Tsu in study of warfare, which has deeply influenced the Chinese thought process over the ages.

Indications from Bond Yields in India for savers in Fixed income returns products

 Just couple of weeks ago, everyone was surprised by the absence of RBI in the market when the yields moved upto 5.97% and now all of a sudden 179/180 bn INR of 10-year benchmark bond was purchased by primary dealers. Still prices of bonds increased ?? Very strange

The hint lies in the yields of 6.02% which seems is not comfortable level with RBI. It seems RBI has put its foot down on yields and market has sniffed the discomfort of RBI.

Also, it also indicates that there are concerns around oversupply of Govt. debt in India and that 12 tn INR plan is still on the books. 

Anyway, it seems the real inflation will cross 7% sooner or later. What this means for savers and retail investors in fixed income products

Effectively fixed income products are giving negative returns of around 1.5% (5.5%-7.0%). There are losers and winners due to this negative real rate of interest. 

Questions to ask before taking advise

 Very good and insightful article

https://www.forbes.com/sites/phillewis1/2020/08/25/5-questions-you-should-always-ask-before-taking-anyones-advice/#34c9c65d2589

The most critical thing is the experience of the advisor and the skin in the game. 

The traditional consulting model of putting up the generalistst and fees upfront model doesn't fit this. 

What may spoil the market party ?

Fact - Market is in a party mood

Reasons

1. Hopes for a V shaped Recovery 
2. Heavy Retail participation (what to do when WFH)
3. Song of India overtaking China playing too frequently and too hard

Disruptions

1. More or less clear that Recovery will not be V shaped as some sectors such as Tourism, Travel, Hospitality may be silent for long and some sector will have deep tech disruptions
2. Retail participants will get bored and move to other excitements and fun stuff. 
3. Even a slight correction may have a catastrophic effect on retail participation

I march I wrote this article

http://luckylehana.blogspot.com/2020/03/covid-19-lauchpad-for-economy-40.html

and I still hold my strong belief that this is once in a century kind of event and will wipe out may be 25% of the NIFTY companies and may be around 50% will have deep pain at least for more than 3 quarters.

Regarding Indian Dominance song, there is an excellent article by Prof. Rama here 

https://outlookbusiness.com/specials/what-does-india-need-to-do-to-ace-manufacturing-6001

Actually WSJ just wrote an article on the faltering consumer story of Indian Middle Class here

https://www.wsj.com/articles/covid-19-hits-indias-already-faltering-consumers-hardest-11597921200?mod=wsjtwittertest19 

Regarding Valuations, I think it makes sense to identify companies in public market from Private Equity point of view, in the current scenario as expressed in this article

http://luckylehana.blogspot.com/2020/08/changing-fundamentals-of-value-investing.html

there are some interesting companies such as ITC, which always amuse me and there is an excellent article on the same 

https://finshots.in/markets/whats-wrong-with-itc/?utm_medium=Whatsapp&utm_source=Finshots_App_User

This article tear down the business and try to highlight the dichotomy of value based investing

Changing Fundamentals of Value Investing

 Value Investing has long been postulated as holy grain of investments in public markets. I come from PE (Private Equity) background, where they don't give any weight-age to traditional value investing parameters such as 

1. Book Value
2. P/E Ratios

I was always thinking that there is a disconnect between the real economy and market. However, offlate, it has been observed that the analysts in institutional investment funds are more focussed on traditional PE concepts such as 

1. EBIDTA
2. De-risking of Cash flows
3. Stakeholder Analysis (eg. Power Plant, Mining)
4. Impact - Influence Matrix Analysis

It seems that Post COVID public markets investment is no different than the investment theme of Project Finance / PE Funds where they put in extra efforts to evaluate these parameter

Concepts like book value has totally lost relevance. I am not sure why these people on CNBC or market news media keep on shouting P/B etc. 

Value Investment has moved ahead of traditional / bookish evaluation as we are amid a once-in-century kind of event.

Advisory post COVID public markets

1. High Retail participation may have propelled the markets to unrealistic valuations, which are absurd
2. Be focused on staples and tech story
3. Don't use Value Investing (as it is taught or professed)
4. Cut the crap and be focused on EBIDTA similar to PE/Project Finance

RBI toffee of 90% LTV limit on Gold loan

Today, RBI did something phenomenal - LTV was increased from 75% to 90%.

As usual, Retail investor got excited and bought Muthoot at such high valuations and increased the share by 5% and then the institutional investors cashed in and booked the profit. Retail investors once again found on wrong foot. 

Anyway, gold loan is a complex business and that is why it is very difficult to disrupt this business. Even the marquee VC investors and their portfolio Rupeek.com has failed to disrupt the market

The complexity of the gold loan business is due to 

1. Requirement of physical custody of gold
2. Low margins 
3. Requirement of stringent testing amid so many frauds
4. Special Jewelry which is made fraudulently just for gold loans (This is the category which is evolving very fast over last couple of years)

Muthoot and other NBFC's have developed skills and expertise related to gold loans and RBI has made their job easy by putting up 75% limit in the past. This limit derisked the gold loan business and these NBFC's expanded very fast. Cash for gold was booming due to increase in value of gold in last couple of years. Recently, due to COVID, banks also expanded very fast in gold loan as it was low risk business

It seems this move was instigated by the bankers lobby as the NBFCs were left high and dry. RBI have tied both legs of NBFC's by 75% LTV and made the banks to run full fast by 90% LTV.

Is this fair?

Is this prudent ?

Isn't this repeat of 2013 movie of sudden drop in gold prices ?

Why not NBFC, they dont have any public money?

RBI has far too many questions to answer on this unwarranted step. Without going into this argument, it is interesting too into the after-affects. 

Today's change disrupted the market irreversibly and made gold loan as risky business

1. Banks will now be confused as they will not be able to take so much of risk of higher LTV and lower LTV will not fetch them business
2. Big NBFC's can't trust their employees for accurate testing and give 90% LTV
3. Smaller banks like CSB, Federal, Fincare may take a good pie but again at the risk of default. (Is RBI really prudent in this step??)

Future Projections

New contours of competition will evolve as under 

1. Banks will project themselves as low interest high LTV lender
2. NBFC's will get confused first and then they will develop their own positioning with multiple products with multiple LTV's

LTV will become a real weapon for competition and gold loan will now shift towards personal loan and quality of borrower along with the quality of gold will become the new criterion for evaluation of the loan quality. 

What will AGLOC do ?

Will Muthoot Mannapuram file case against RBI?

Can this be treated against the Article 19 of constitution ?

Article 19 (1) (g) guarantees that all citizens shall have the right to practice any profession, or to carry on occupation, trade or business.

Is this strong enough ground to challenge RBI ? 

Indo-Chinese Organisations for people to people contacts

Around 10 years ago, I was living in China with my wife and she developed some medical complications, which we googled and found were similar to Vertigo (google used to work at that time in China). We have to take help of our colleagues to find the right hospital and the right doctor and to explain the exact nature of the symptoms. 

They gave a very good medicine - Vertigo Calm (a TCM) 

A month later they gave - Gingoba Biloba (a TCM)

10 years fast forward, my wife again developed similar symptoms. We tried n number of doctors and medicines but nothing seemed to work. Finally one of my colleague and a Chinese friend fetched both these medicines one by one from China. 

I have studied, worked and lived in China for long and feel a deep connect with Chinese people. Though there are border tensions between India and China and deep mistrust between the governments but I still believe that the destiny of both the Asian Countries are connected. Both the countries are immediate neighbors and next superpowers and both have to live peacefully with each other. Infact, I strongly believe that both countries can never go for a war. The current scenarios are due to historically follies of British cartographers and both the countries need to move ahead of the historical follies.  

At the same time, there is lack of strong people to people contact organisation between India and China. I casually google through and found some organisations, which are focused on 

1. Trade
2. Economy
3. Culture
4. Specific Causes
5. Policy Making and Research

But there is no organisation, which is focused on 

1. People to people contact
2. Helping Indians in China or Chinese in India for petty issues related to passport, local police, rentals etc. 

Hope, one day, the dark clouds will get over and genuine people to people contacts will start between two great nations. 

Similarities between Wirecard in Germany and Satyam in India?

 No price for guessing - E&Y/PWC has been at the forefront of both of these scams. 

How long will regulators take to 

1. Do audit of auditors
2. Break the monopoly of Big4
3. Punish Individuals within the companies
4. Impose penalties and limited ban on these companies

Both the above mentioned cases are strikingly similar in the sense that fraud account entries were created and money was show there when it was not there. 

This was a basic audit check which even a Preet Vihar / Laxmi Nagar - Rs 100 per hour CA is also doing on all the firms, he is auditing

How can a firm, which charges - Rs 10,000 per hour (whole team) could have missed such a fundamental thing?

Does this point towards something intentional ?

Is this prevelant or a one of event?

How much cut the team gets or the Big4 company gets for such acts ?

Uber - 3000 people fired with 3 minute Zoom Call

This is the new normal in the world due to ongoing "Once in a century" kind of event. Companies have no option as they are not supposed to do Charity and have to compete in hyper competitive era.

But from individual point of view, it is really devastating. There are normally 4-5 stages, whenever something like that happens to us

1. Denial
2. Anger
3. Bargaining
4. Depression
5. Acceptance

The only sober advise for such people can be that instead of getting to stages one-by-one. It is better to directly jump from 1->5 or Denial -> Acceptance.

Coming back to the macro economic view, monthly salaries are not very good for the economy also, as salaried people are bound to be risk averse and less innovative. This is not good for both the economy as well as civilization. I once read a very interesting question in my school book that who are the people, who are most important to the civilization. It is not the billionaires but the picaso, pluto, innovators and the scientists, who helped the world to move forward. IT has enabled these thinkers and innovators to earn big bucks such as the case of Facebook, Twitter etc...

Even if one is salaried person, hate salary like hell. There are 3 addictions mentioned by Naseb Taleb

1. Carbohydrate
2. Drugs
3. Monthly Salary

Drugs are widely discussed, but why the Carbohydrates and Monthly salaries are not discussed, is lack of intelligence in popular media

Once more, I am sorry for using harsh words for someone who might have lost job, but try to think on these lines and prepare for a greater goals for future, while managing your current with basic lifestyle.

Is the market out of woods?

No, the market is not out of woods. There is no long term positive environment for the business as of now.

The current PE of the Nifty is 22.35, which is too high for current environment.

Retail participation seems to be very high. March was good time and may be April, but not now. 

The market is overbought and rich at the moment and should be a crying signal for staying away. Wait till September, when the winters set in Northern Hemisphere and when the market is back to level around 18-20 range.

Advisory 

1. Keep portfolio tech focused
2. Consumption story is strong 
3. Staples within consumption story
4. Avoid CAPEX heavy 
5. No new investment, better exit around peak summer early monsoon - July / August 

Locked down 1 by 1 and they are counting

They locked down some places in Kerala in the beginning. Then came Nashik and finally all of sudden spurt of cities and even smaller places like Bhilwara.

Today (21 March) they locked down Gurgaon and Faridabad.

Better sense has prevailed, things have already delayed and I don't know why lesson were not learnt from Europe's mistake.

Just now, they locked down perhaps Rajasthan and West Bengal

Finally - The long pending market correction

“I told you so” – Well this is what I have been avoiding saying during conversation with people around me. Anyway, I was always bearish in my previous projections from last 2 years. I still hold my views that there is no point investing in the market at a PE higher than 20. COVID is not a reason but just a trigger for correction, which was long pending in the stock market. Public equity was priced way above the reasonable levels.

There is a bit of misinformation being spread among retail investors around the definition of PE. The only PE which is accurate is trailing PE. Forward PE may be meaningful but the calculations are all in thin air. Retail investors should avoid falling into such traps.

A passive investor cant do stock selection with confidence and moreover for retail investors, this needs a bit of expertise. For such investors a good parameter for investment is as under

(*Source - https://www.equityfriend.com/investment-charts/nifty-pe-chart-nifty-pb-chart-nifty-dividend-yield-chart.html)

Again the big question is – Is it the right time to invest?

The answer to this question depends on the level of expertise of an investor.

A.      If someone has already decided to invest and have reasonable confidence in evaluation of a sector or a company, then at PE of 20, one may go ahead and invest.

B.      If someone is pure retail investor, then this is not the right to invest. The market is just touching at PE of 20 and the PE is still very high for a passive value investor. For such investor, it is better to wait for PE of at least 18 to jump in the market.

Confidence is the key and history is the answer to all the questions and it is better to evaluate the past performance of the market on monthly basis.

https://nifty-pe-ratio.com/

Key lessons to be learned from COVID event are as under

1.       Markets can’t stay stupid for long

2.       The time duration for correction of market may be longer at times

3.       Don’t invest till PE drops below 20

4.       Don’t try to time the market

5.       Don’t search for peaks and bottoms

COVID -19 : Lauchpad for Economy 4.0

COVID -19 : Lauchpad for Economy 4.0

COVID-19 is once in a century kind of event. There were plagues in the past, which used to make the world, standstill for 5-10 years but they were not recorded or discussed at such great length, perhaps due to lack of communication channels. No one knows the accurate answers on future of such pandemics, but this note aspires to make a brief attempt to analyze the projections on the future scenarios.

How long will this take?

There are many theories going on how long will this take for things to settle down. China published the Genome in beginning of January 2020. Scientists have replicated the synthetic RNA and trying to develop the vaccines or antidotes. But it seems that there are very less chances of getting anything developed, approved, mass - produced and then distributed in less than 18-24 months. Adding to this is the lack of complete understanding about the 2 most prevalent strains. As of now, they just know that the L Strain (which is close to 70% of the total infections) is more dangerous than the S strain.

There may be more than 2 strains but what if those (other than L and S) are more dangerous mutations?

Too fast vaccine approvals or a quick fix can botch up the things. It may have dangerous implications and such vaccines may lead to some super virus.

Wait for Herd Immunity – UK postulated this but even they backed out as by the time 60% gets infected, we may have perhaps 10% deaths.

So, the consensus, as of now (early March 2020) seems to be that Vaccine (with reasonable accuracy and effectiveness) will be with the commoners (elite may have hands on it earlier), at the best, around mid 2021. However, some molecules may come in between for better treatment or delaying the impact on lungs.

Oh! China won and South Korea, Taiwan, Russia and Singapore are doing well, so can we!

There are different governance structures around the world with different level of discipline and religious interferences in governance. The underlying fundamental principle of democracy provides the sense of freedom among its citizens, which they have enjoyed with nil (called reasonable) restrictions. Also, some countries like Iran have governance structure with strong religious tinge (which provides the validity to the ruling class). All these factors play out and make it complex and close to impossible to replicate Chinese success.

Human beings should actually be very thankful that this started in China and China already set up templates of lockdown and severe actions, which enabled most of the liberal and diverse societies outside China to reasonably accept the hardships.

So, some countries (one with democratic setups) may take way-way-way longer to come at the stage, where Chinese is right now.

What will be shape of the recovery Curve?

Markets work on investor psychologies, so it is futile to touch market recovery shape. However, there are 3 scenarios, which are currently being discussed among experts with respect to the economy

1.       Optimistic - U Shape

2.       Pessimistic – L Shaped

3.       Ultra-Optimistics - V Shaped

Assuming there will be a point of inflection, all these are plausible options. Though Causation cannot be derived from Correlation, still it seems the correlation of virus spread v/s temperature is strong enough. As of now, it seems the virus has not spread across countries in the tropics. Countries such as India, Bangladesh, Indonesia and Nigeria etc have huge population and minimal cases as of early march. Due to uncertainties over the factors responsible for spread, the assumption of a single point of inflection seems to be wrong. Instead the recovery may be in waves as under

1.       It may subside in summer; there may be a trough around June-July 2020. Complacency from euphoria of winning over COVID may set in around May 2020 (want avoid discussing stock markets, but it seems they might surge from May to July)

2.       If vaccine or some molecule does not come by October 2020 (mostly like scenario), then there might be another peak around December 2020 – February 2021 (once the winter sets in northern hemisphere).

3.       Seasonal (Weather) Waves of high amplitude, across multiple seasons, degenerating and culminating with herd immunity, if vaccine is delayed

4.       Waves may be different across geographies and across different demographics in same hemisphere. Within same hemispheres, countries like India, Nigeria, Indonesia may face the real test in December 2020

Though there are more questions than answers over shapes of these waves, the recovery may not have any uniform global defined path.

What will be the new economy look like post COVID-19 or say 2023?

100,000 years ago, group of monkeys descended from trees in Africa and they learnt new ways of fighting out the dangers on ground. These monkeys were, are and will be the most dominant and intelligent species. These monkeys kept on finding new ways of leveraging resources, other than their own limbs or tails, as was the case with lions or elephants, as under

Phase 1 – They leveraged stones and sticks and warded off their threats

Phase 2 – They leveraged other animals (cows and horses) to power their basic machines

Phase 3 – They leveraged coal (and solar recently) to increase powers of their advanced machines

Phase 4 – They may leverage advanced machines to produce more intelligence (AI)

Phase 4 produced something, which makes these monkeys more redundant in their own pursuit of complex and intelligent systems. Post AI, the redundancy of human beings have increased and COVID-19 is going to provide the impetus for this shift as under

1.       Knowledge Worker

a.       WFH (Work from home) may become the norm in 2 years as companies will try to reduce costs during recession, which seems to be certain as of early march

b.      In their pursuit, to derive value from WFH, companies will learn to automate more work

c.       To automate more work, new forms of AI may come up in future

d.      Transmission and application of Knowledge and skills, which need physical meetings or interactions, will be substituted with more complex AI. For Example – Complex IT skills of 2020 may become “Routine job of 2023” and may no longer need physical presence of skilled human being.

e.      Some New jobs will definitely be created in next level of complexity of the knowledge economy, but they may be lesser than the jobs, which ceased to exist

2.       Physical Worker

a.       Due to extended period of social isolation, it will become imperative to replace almost all the physical work by machines

b.      Some jobs will totally disappear due to social isolation. Many people knew what does a lift operator or phone operator means in 2005 and many of us know what a translator or receptionist or waiter in restaurant means 2020. But many of these jobs may not be traceable in 2023.

3.       Privacy and Social Aspects of Economy amid Government Control

Success of China in managing crisis and quickly revitalizing the economy has provided background for greater support for government interventions and strict control in economy as a whole.

a.       To control COVID-19, there will be increased scrutiny of data related to an individual (such as travel data, health etc)

b.      If this COVID-19 dust takes longer to settle, then citizen privacy may become a watered down term, even in very liberal countries.

c.       Liberal Societies has social pressure groups and their pressure tactics, which sometimes succeed in cases such forcing a pharma companies or cosmetics company to change their course of action. Due to prolonged period of social isolation and increase in powers of governing structures, the powers of citizens to express opinion of society may reduce.

d.      Globalization and Urbanization may subside for some time

e.      Call it bad or good; governments will be tempting to exercise greater control in some sectors such as healthcare, tourism, retail etc. Some countries may even nationalize some proportion of private hospitals or pharma companies (hope that happens in India)

If it takes longer than 18 months, then perhaps “Machines will take over”. The redundancy of human beings in the economy may increase drastically and irreversibly. There may be some short term pain with long term gain for human civilization as under

1.       There may be sudden decrease in pollution and carbon footprints, which will increase quality of life of human beings

2.       Human Beings will get more free to do more creative and research work rather than routine work

3.       Political boundaries of work will reduce a lot and hence pace of outsourcing of work to countries like India will increase (side comment on market - Body shopping of IT manpower will reduce simultaneously so it will have negative impact also)

4.       To prevent any social unrest from short term pain and with increase confidence in underlying data related to citizens, schemes like Universal Income may evolve in many countries.

Fortunately Coronavirus originated in China

China created a template for everyone on how to handle this menace. China could take bold decisions of forced social distancing, which will be difficult to enforce in Europe, India or US.

Cases have now started appearing in Europe, Thailand, US, Singapore and even India.

If this leaks out too much out of China, it will create a havoc and the world will see another replica of Babunic Plague of Europe.

This will be perhaps once in a century event, stay out of any equity or any market linked portfolio. As I have been advising in the past, go to FD's or may be short the market, if you are trader