Indian markets - viable again?

Discussion in 'General Trading Discussion' started by Trooper, May 18, 2014.

  1. Trooper

    Trooper Member

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    So a business friendly government has come to power in India and promises to revive a moribund and stagnant market. Seemingly overnight, markets surged and currency appreciated in an unprecedented way. We all know the whole emerging markets fad faded pretty fast, but is this a sign that they're back on the line? Would you consider investing in one of the BRIC bunch?

    http://www.bloomberg.com/news/2014-...ism-india-economy-will-lead-bric-rebound.html
     
  2. InterestedInvesto

    InterestedInvesto Active Member

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    What is the BRIC bunch? A few friends told me that the market is too volatile right now and that it was better to stay away. Other people have told me that this is the right time to invest in stocks that have the government backing like power, oil and national banks. I would like some advice.
     
  3. crimsonghost747

    crimsonghost747 Senior Investor

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    Personally I'm not a big fan of investing into India. Emerging markets are interesting but I think India is too risky... they have their own way of doing things. And it's not really a good way in my opinion. (corruption, legal problems, tax problems for foreign companies etc) Still worth taking a look at them, but I'd be very careful and as always diversifying geographically is an important safe guard.
     
  4. InterestedInvesto

    InterestedInvesto Active Member

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    If not India, what other countries/markets would you recommend investing in? Could you elaborate on your statement "they have their own way of doing things"? I don't quite follow.
     
  5. Strykstar

    Strykstar Well-Known Member

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    That's a good question, but I'm a bit fearful.
    Last time I decided to invest in an emerging market was when Brazil got handed the World Cup and Olympic Games, but there has been so much trouble with those developments that I might end up losing some money there..
     
  6. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I agree with diversifying particularly in emerging markets. And I wouldn't pay much attention to those telling you that it is or isn't the right time to start getting into the markets. The safest way to invest is to invest in a diversified portfolio for the long term, not try to time markets, and dollar cost average into your investments.
     
  7. InterestedInvesto

    InterestedInvesto Active Member

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    Yes, I read a similar opinion that said you should just follow your investment strategy as you did. That there was no point changing where you would normally invest based on an election result as you couldn't predict the future. A little dumb maybe, because surely you would know what the new government's stated policies are, and those are likelier to be what they pursue than not.
     
  8. crimsonghost747

    crimsonghost747 Senior Investor

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    I'm looking at individual companies from south america. I also think there is potential in the Philippines/Malaysia/Indonesia and that general area, though their selection of companies listed on the stock exchange seems quite poor. So if I do decide to invest there it might be through an ETF.

    I already elaborated on the India part: corruption, legal and tax problems. Indian companies might be able to handle these better, but many foreign companies investing into India have certainly ran into these problems.
     
  9. jonigjermani

    jonigjermani Member

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    Quite fun that part "They have their own way of doing things" Emerging economies are still part of a really informal trade that goes on under the table. this type of informality makes the numbers hard to pattern and the lack of patters makes it a bad idea to invest.
     
  10. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Well, if you know a country is going from a business-friendly current leader to a new one who is not, I'd say stay away entirely. Or even if you're not sure - if there's an election with one candidate who is pro-business and another who is not - wait it out until after the election to decide. There are too many other places and things to invest in. Put the $ to work somewhere else, but don't just sit in cash because of an election in one country.


    But just in general, market timing is not a very good idea for most investors. Everybody knows somebody who knows that the sky will soon fall... and before you know it, 5 years have passed and the markets have jumped up 150% since the doomsayers' predictions.

    Emerging markets in general are riskier, and political risk is often a major reason.
     

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