A Little More Realism Please
September 6, 2013 Leave a comment
There is nothing good about pessimism.It merely saps initiative and energy.So the new RBI Governor’s strong start was welcome. However there is only so much that the RBI can do.So there is no sense in giving way to irrational exuberance.For too long our government has tried to orchestrate atmospherics and make loose policy statements.However the reality has been no concerted action to implement policies.So instead of believing that the capable hands of Raghuram Rajan will kick start the economy,we’d better push the government to act at the ground level. Talking ourselves into believing that all is right means we will not be doing the things we need to do to set things right.
In a worsening job market where entering the job force is becoming tougher, lay-offs are becoming a reality and the fear of being laid-off is a daily reality,a lot of people are mulling a sabbatical of some sort,often attending an MBA program.
Invest in their apartments, and you will get rich. But invest in their shares and you will be poorer. Unlike in other sectors, values of shares of listed real estate companies do not reflect the growing value of their products. Sample this: Investments made in shares of real estate companies like Delhi-based Unitech and DLF, Mumbai-based Indiabulls Real Estate or Bangalore-based Purvankara in 2008 would have crashed to half or to a fifth of their value by now whereas in the same period, returns from investments made in homes built by the same companies would have risen anywhere between 50% and 150% or more. If one had bought an apartment in any Gurgaon-based apartment building of DLF — India’s biggest builder — in 2008, the investment would have, by now, appreciated 60-175%. Had the same money been used to purchase DLF’s shares the same year, that investment would have eroded to just 20%. Investors of Unitech, Indiabulls and other real estate firms would have a similar story to tell. 
wealthymatters 