S Naren, CIO – ICICI Prudential AMC, shares his outlook on the equity markets for 2016, the problems the markets are facing currently and explains why investing in the current bear phase will be rewarding for investors.
Notes: Just for the record, S Naren has been one of the few fund managers who has been very successful in getting broad market direction right. In Jan 2015 he called for investors to move into bonds and wait for markets to stabilize and earnings growth to come through. In Aug 2013, when Nifty was at 5150, he was of clear view that investors should buy Nifty or broad based mutual funds to benefit from upswing as valuations were crushed. That was also a very valuable assessment.
In this valuable video, George Soros shares his lifetime learnings on Financial Markets. Some of the key messages are:
1. In business cycles, Earnings (EPS) rise will lead Valuation(P/E) rise, and Earnings (EPS) fall will lead Valuation(P/E) fall because investors tend to extrapolate the present into the future.
2. Whatever is known to the majority, can not create profits (competitive advantage).
3. Markets discount all the known things. The profits are in the unknown (events of the future), which are not yet discounted by the market.
While this video is 5 years old, the content is still very relevant, and some of the implications and projections by George Soros have actually come true in last 5 years. The key point to note is that George Soros does not accept/agree with the Efficient Market Theory. While we can’t predict the future, it is possible to create scenarios and test them against the events as they unfold.
Open Society Foundations chairman and founder George Soros shares his latest thinking on economics and politics in a five-part lecture series recorded at Central European University, October 26-30, 2009. The lectures are the culmination of a lifetime of practical and philosophical reflection. Continue reading →