Bahar Oct 08 Diwali Special - MMAbuDhabi Home

All that goes down has to come up one day. There has been many economic cycles in past
century. Worst being 1932 and then 1987and then soon after 9/11 (Sep 2001). We have seem
drastic upward swings soon after these worst times. In fact those who invested at the worst of the
times saw the best of the returns on those particular investments.
Pick up Banking , Telecom, Pharma, Power. Stay away from IT, Realty, Heavy Engg for now.
Banking and Telecom will be fairly insulated from recessionary trends. Telecom will never be.
Banks till get affected in short run. But that is why they are available cheap. UCO at 30, Dena at
35, Syndicate at 55, Indusind at 45, Allahabad at 50 ar all available at 2003 PE ratios of 3 and 4
now. In 2 years time(at max) you shall see these back on 8-10 multiples thus assuring 100% plus
returns.
I do not mean to say that we have hit the bottom. We will still go down but the downward
movement will now be limited compared to upward potential. It is all about managing these 2
aspects and come out winner.
A gambler does exactly that. If he sees probability in favour of upwards movement, he will take
bets in that direction.
By the way, whichever way market moves, one can still make money. To know how, we will talk in
the next article. Off course, we are referring to derivatives.
Good Luck.
Anil Pakale.
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