Technology Outlook - Neutral, like Micro Technologies

I am pretty neutral on technology.

With increasing salaries, skewed margins and primary markets like US, Europe not in good shape I am not much interested this area.

But there is still one stock which I would like to recommend "Micro Technologies".

Reason - 52 week low : 144

P/E - 3.19 vs Industry P/E - 25

Price/BookValue - 0.6

This company is product base, it has domestic presence. This company has great strategic alliances in Japanese and Israel based companies. You might hear of some acquisition soon.

Best part is that they have rural India on radar with their security based products.

Saving or Safing………

If you ask an economist, he would give you a following definition.
E = C + I
Where, E is Household Income
C = Consumption
I = Investment
Well if you wear the hat of an economist, above might make sense but lets wear the hat of an Investor and try to see things. As an investor, I am only interested in the “I” part of the above. What do I get to invest and how do I get to invest?
If I see from an economist point of view if I save money, i.e put my money in bank account is an investment (because obviously it is not the consumption). But does that hold good for an Investor. I am trying to put my arguments for this.
Lets first try to understand the meaning of word “Saving”. Saving has various meanings as an English word. Let me mention couple of definitions which might be of our interest:
1. To avoid unnecessary expense or expenditure; to prevent waste; to be economical.
2. To keep from being spent or lost; to secure from waste or expenditure.
3. To make safe; to procure the safety of; to preserve from injury, destruction, or evil of any kind; to rescue from impending danger.
4. To keep in a safe condition; safeguard
Yes there is a huge list of meanings you could find on net but the above four were able to describe it broadly.
Most people when put their money in bank they consider it as saving, but I think it actually not saving but its more of a “Safing” (Safeguarding your money) .
If you go by the dictionary meaning of word “Saving” described in point 3 and point 4 then yes the money in your bank is your saving but if you think as an investor “Savings” makes sense as definition in point 1 and point 2.
So in layman terms how do I Save.
If you could avoid purchasing an unnecessary gift for your wife or girlfriend, you save.
If you could buy a Beneton Shirt or expensive shoes at 60% discount because you know the operations manager, you save.
If you could buy a property in an upcoming area in very reasonable rates because one of your childhood buddy happens to be a property dealer, you save.
So broadly you save money if you could get anything in lesser cash which is worth more for the rest of the world. You could attribute this either to your PR, Contacts, Network or Negotiation Skills.
But to me if you keep your money in your bank account, its not “Saving” its “Safing”.

Is Correction Over?

Markets are reviving but I still do feel that I may still get one more jolt of correction.
Be ready for some shopping.
Below are few more bets:
1. Philips Carbon
2. Cosmo Films

Markets Correcting - My Bets

Well the moment is here. Markets have started correcting.
I was anxiously waiting for this correction. I do not expect the market to correct beyond 18000. After some wait and sell off, I am planning to start putting money in defensive stocks.
Below is my list of stack now I am following and might accumulate:

1. Nippon Batteries
2. Noida Toll
3. Kirlosker Ferreous Industries
4. NTPC

RBI - REPO Rate hike

RBI has hiked the REPO and Reverse Repo today.
This would be negative for all real estate stocks

Recession and Great Indian Middle Class

We are already interpolating another recession fears, when we have not been completely out of the previous yet.
We dont know whether it will happen again or not, there is a fractured opinion in the international community of economists. But we have the chance to look back and see what happened.

It is well evident that India as a nation came out of the recession in flying colors. Well, atleast thats what the world says. Following are some Real GDP growth rates for India.
2007 - 9.37
2008 - 7.35
2009 - 5.36

Now the second quarter GDP 2010 is 8.8. It has not been that bad.
So the point of the discussion is that, who let us out of this phase, RBI or the great Indian Middle Class.

First Point: Being over leveraged was the biggest problem Western World had. But did they have any choice. No..
India was not over leveraged, not by chance but by choice. We are still developing and at this stature economies cant afford to be over leveraged. The Middle Class of India still believe in savings and can afford to be over invested. Whereas western world is of the other choice. Its not their mistake but they have no choice.

Why? Because lets take a example. If you earn $20, of which you invest $10 (50% of your earning)and make $2 out of it. This makes a 20% of profit.
The next year you would have $22 and you have to grow to you would have a pressure to make more than 20% profit. We would have the pessure to invest $10(our capital) and $2(our profit) means $12, which is slightly more than 50% of our total capital i.e. $22. This is how as you keep growing you start increasing the percentage of income being invested.

Second Point: Having a big middle class population has come to our rescue not only as a work force but also as the consumer base. Our domestic consumption was high enough to handle recessionary pressures for a longer time.

Third point: The untapped, unnoticed black money. Due to sectors like automobile, reality etc. the huge amount of black money came into circulation to save from the drought of liquidity.

Fourth Point: On the back of the large Middle Class, the state owned organizations like LIC, EPFO etc. are so cash rich that they have the capability to take the country out from small hiccups. Even they bailed out the government from recent low subscribed IPOs like NMDC, NTPC.

Fifth point: The love for gold for this class. No matter how much the price of gold goes up, we tend to buy more due to the customs we have. And as we know, as of now till dollar is the pegging currency around the world, the more it weakens more the price of gold goes up. So atleast in recent times gold prices are supposed to go up till the world economy stabilizes and dollar holds up its value.

So in the end my credit goes to the Great Indian Middle Class. Hats off to them. But this cannot happen everytime. We have also started getting into the vicious loop of long term loans in reality, I dont understand why there is so much of rush as if in five years there would be no place to live on earth. We should learn and not follow West. As Chanakya famously said "You do not have time to commit all the mistakes in single life".

Further on Reliance, Suzlon and Share Market

I still believe its time for holding.
Liquidating a bit to get ready for next correction.

I would prefer to sell Suzlon and Reliance around 15% - 20% of my holding if I get any spike.
and buy ant next dip.

Coal India IPO is going to suck some liquidity from the market