India to Borrow and Spend More in 2010-2011

[karan.1970]

You think India's market cap of three times India's GDP is good news? It's a big bubble, and sane investors will stay away from it.

Any market cap larger than the nation's gdp is big red flag, not an incentive to invest more.

Really?? Lets draw a parallel to a company. The nearest indicator to a GDP for a company is its annual revenue. So are you saying that any company trading at a value that makes it Market cap more than its annual revenues is in a bubble territory??

While that may hold true for commodity industry, there are high growth comapnies and industries that command in excess of 2x and 3x of their annual revenues

The reason behind that is following

Price of a company depends not only on the annual revenues but also on Growth prospects and the asset base of the company. Same rules apply to a country. Take an example of 2 companies.. One expected to grow at over 8% (with last 5 years backing the trend) like India and another expected to be in the range of 2-3% with last few years not being too kind due to internal bickering and losses(like Pakistan).. Which company do you think will command a higher Price to Revenue ratio...??

Same logic works for a country. If Price to Revenue (or M Cap to GDP) ratio was the sure shot way to determine which company/country will grow in future and which will not, then the track record of all investors in this world would have been 100%

 

[ajpirzada]

Hey Hey Dude..........

I request you Please don't Answer some @$$ H0lE$, They just want to Banned our Thinktank Members......

You are one of the fav. I read or answer some of the thread just by reading your name in it.........


So Please controll you emotions and keep posting great articals.

writing in dollar sign will not make it less offending
please avoid such language. there are many other ways of tellin your friend to not answer

 

[riju78]

i am no economist but i am sure my indian friends have sent mr.haq to hiding... he will be back in a while with some other anti indian musings!! i am wondering what topic he will find this time...he has coverd almost evrything.....

 

[RiazHaq]

Really?? Lets draw a parallel to a company. The nearest indicator to a GDP for a company is its annual revenue. So are you saying that any company trading at a value that makes it Market cap more than its annual revenues is in a bubble territory??

While that may hold true for commodity industry, there are high growth comapnies and industries that command in excess of 2x and 3x of their annual revenues

The reason behind that is following

Price of a company depends not only on the annual revenues but also on Growth prospects and the asset base of the company. Same rules apply to a country. Take an example of 2 companies.. One expected to grow at over 8% (with last 5 years backing the trend) like India and another expected to be in the range of 2-3% with last few years not being too kind due to internal bickering and losses(like Pakistan).. Which company do you think will command a higher Price to Revenue ratio...??

Same logic works for a country. If Price to Revenue (or M Cap to GDP) ratio was the sure shot way to determine which company/country will grow in future and which will not, then the track record of all investors in this world would have been 100%

Legendary investor Warren Buffett calls total market cap to gdp ratio as the "best single measure" for investors to make decisions on its future prospects.

I think it's ridiculous to compare India's economy with the kind of individual high-tech western companies that command premium with all their intellectual property advantages. India's economy is not a high-tech economy, and the small part of it that is high-tech is essentially code coolie work which is the result of cost arbitrage. Most of what is called IT in India is still low-level code work or call centers.

If the stock market does represent the economy as a whole, then it can not be much bigger than, nor grow much faster than the overall economy, unless it is heavily undervalued to begin with.

These are some of the basics of stock market investing anywhere in the world. Those who ignore these rules do so at their own peril.


Where Are We with Market Valuations?

 

[desiman]

Legendary investor Warren Buffett calls total market cap to gdp ratio as the "best single measure" for investors to make decisions on its future prospects.

I think it's ridiculous to compare India's economy with the kind of individual high-tech western companies that command premium with all their intellectual property advantages. India's economy is not a high-tech economy, and the small part of it that is high-tech is essentially code coolie work which is the result of cost arbitrage. Most of what is called IT in India is still low-level code work or call centers.

If the stock market does represent the economy as a whole, then it can not be much bigger than, nor grow much faster than the overall economy, unless it is heavily undervalued to begin with.

These are some of the basics of stock market investing anywhere in the world. Those who ignore these rules do so at their own peril.


Where Are We with Market Valuations?

Again you have changed the topic and again you are lying. Warren Buffet has never and will never say anything like that. I don’t know where you are getting all this crap from ? How does the GDP vs the Market cap of a stock exchange become an economic measure?????? Why cant you get such simple things really. The website you quoting itself does not talk about what you are talking about and if one was to follow all the given rules there the KSE would be the worst investment possible. The biggest criteria of investment is Stability and that is what is currently lacking in Pakistan. The KSE might give 800% returns but it can also sink the next day. The BSE has had a stable portfolio since the early 1990's and will continue to do so. Now can you please stop posting illogical arguments as ever. You seriously don’t have any idea about what you are saying.

 

[desiman]

Hey Hey Dude..........

I request you Please don't Answer some @$$ H0lE$, They just want to Banned our Thinktank Members......

You are one of the fav. I read or answer some of the thread just by reading your name in it.........


So Please controll you emotions and keep posting great articals.

Dont worry bro everything is good. I just cant stand this Riaz Haq guys lies anymore. Thank you so much for the appreciation, im really grateful for that. Don’t worry the articles will keep coming By the way the LCH will be in the air within the next 2 weeks, so wait for that.

 

[riju78]

Dont worry bro everything is good. I just cant stand this Riaz Haq guys lies anymore. Thank you so much for the appreciation, im really grateful for that. Don’t worry the articles will keep coming By the way the LCH will be in the air within the next 2 weeks, so wait for that.

hi desiman very glad that u have the expertise to answer this guy... he has opened another thread with a similar topic...isnt it funny that he never answers to the questions u guys raise but come up with some nonsense and some link which most of the time is his own silly blog!!

 

[RiazHaq]

Again you have changed the topic and again you are lying. Warren Buffet has never and will never say anything like that. I don’t know where you are getting all this crap from ? How does the GDP vs the Market cap of a stock exchange become an economic measure?????? Why cant you get such simple things really. The website you quoting itself does not talk about what you are talking about and if one was to follow all the given rules there the KSE would be the worst investment possible. The biggest criteria of investment is Stability and that is what is currently lacking in Pakistan. The KSE might give 800% returns but it can also sink the next day. The BSE has had a stable portfolio since the early 1990's and will continue to do so. Now can you please stop posting illogical arguments as ever. You seriously don’t have any idea about what you are saying.

I have serious doubts about your ability to read and understand the basic stuff about investing...I have given you plenty of links to reliable data and credible sources but you continue to flunk badly. It's too high a level for you.

Maybe you can learn something by starting with the ABC of investing in stocks...I bet your local community college in Canada offers such a course.

Start with the basics of valuation criteria, like discounted cash flows and NPVs, PE ratios, PEG ratios, Market cap to GDP ratios, etc. It'll do you a lot of good.

Consider doing that.

 

[riju78]

I have serious doubts about your ability to read and understand the basic stuff about investing...I have given you plenty of links to reliable data and credible sources but you continue to flunk badly. It's too high a level for you.

Maybe you can learn something by starting with the ABC of investing in stocks...I bet your local community college in Canada offers such a course.

Start with the basics of valuation criteria, like discounted cash flows and NPVs, PE ratios, PEG ratios, Market cap to GDP ratios, etc. It'll do you a lot of good.

Consider doing that.

since u r here again why dont u answer the questions they ask u...i have asked u few myself not relating to economics but still no reply!

 

[Jade]

You think India's market cap of three times India's GDP is good news? It's a big bubble, and sane investors will stay away from it.

Any market cap larger than the nation's gdp is big red flag, not an incentive to invest more.

This is the first time I am ever hearing that larger market cap than GDP is a big red flag. Healthy market cap shows the bright future potential.

Are you trying to allude that only insane investors are investing in the India!!! I have got problem with this statement

 

[desiman]

I have serious doubts about your ability to read and understand the basic stuff about investing...I have given you plenty of links to reliable data and credible sources but you continue to flunk badly. It's too high a level for you.

Maybe you can learn something by starting with the ABC of investing in stocks...I bet your local community college in Canada offers such a course.

Start with the basics of valuation criteria, like discounted cash flows and NPVs, PE ratios, PEG ratios, Market cap to GDP ratios, etc. It'll do you a lot of good.
Consider doing that.

So where did you copy and paste that part from ? I hope you know all these things before you question my knowledge about them. I dont want to embarrass you but from your previous post its obvious to see that your knowledge is only limited to what is posted in crap articles on the internet. I would recommend the local mental institute to you also, as your obsessive compulsive disorder of arguing about things that you have idea about is quite irritating. There is no use arguing with you, empty vessels make more noise and you are as empty as one can get.

 

[riju78]

desiman do us a favour...
highlight all the questions in an order and let us see he answers it one by one or whether he will post another essay with his own blog as reference!!!

my question remains y r u living in the US

 

[desiman]

hi desiman very glad that u have the expertise to answer this guy... he has opened another thread with a similar topic...isnt it funny that he never answers to the questions u guys raise but come up with some nonsense and some link which most of the time is his own silly blog!!

Ya I saw his other thread also which is again basically crap as always. He is quite a smart operator, he never answers even one question but cleverly manages to flame and change the topic quickly. And if all else fail’s he accuses the other person of misbehaving. Smart for sure, the typical bollywood villain Dun worry i am enjoying this a lot myself lol

 

[desiman]

desiman do us a favour...
highlight all the questions in an order and let us see he answers it one by one or whether he will post another essay with his own blog as reference!!!

my question remains y r u living in the US

lol that would take me days, i would atleast asked him 100 questions but somehow he missed them lol it does not make a difference brother, the people who dont want to answer will not. When you dont know what to say what else can you do right lol

 

[riju78]

lol that would take me days, i would atleast asked him 100 questions but somehow he missed them lol it does not make a difference brother, the people who dont want to answer will not. When you dont know what to say what else can you do right lol

hehe..he will probably start a new topic saying X amount indian vehicles dont have a spare tyre!!