Pension Lump Sum Dear Mr. Berko: I'll soon be 68. I have worked for a large public company for 28 years and will retire at the end of December. The company will give me $1,948 a month for as long as I live, and if my wife outlives me, it will give her $1,663 a month …Read more. Money for College? Dear Mr. Berko: Our 20-year-old son will finish high school this December when he completes his online courses. He broke his arm playing varsity football three years ago and can't qualify for a football scholarship. He is a fair student, with minor …Read more. Are Times Changing? Dear Mr. Berko: Some newsletters are becoming alarmingly negative on the economy and the stock market. What is your opinion here? — TC, Wilmington, N.C. Dear TC: I'm concerned but carefully positive until June 2017. The economies of the …Read more. The Dow Jones at 23,000 Dear Mr. Berko: We heard you speak in Gainesville, Florida, last August. One of your comments was that you believed the Dow Jones industrial average will reach between 23,000 and 25,000 by 2020. How can you believe this? Don't you listen to what …Read more.more articles
Investing in India
Dear Mr. Berko: I lost $19,000 in the Chinese stock market because I didn't see the bubble coming. I believe that our market has topped out, and I think the Indian stock market looks very attractive now that China's economy has stalled. What can you tell me about the Indian stock market and India's economy? What stocks would you recommend in India? — LL, Waterloo, Iowa
Dear LL: None.
Everybody likes the Indian market and the Indian economy. But when "everybody" hops on those ubiquitous Indian buses with all those cooking pots, goats and chickens, it's time to disembark.
I've been to India frequently — traveling for weeks with a backpack and tent, by horse, by foot and by bus from Jammu and Kashmir to New Delhi and Hyderabad. During a dozen trips, I've learned a lot about the country, its 1.25 billion people, its merchant and privileged classes, and its government bureaucracy. And I don't trust the privileged class, which thrives on its mutualistic, symbiotic financial relationship with a blatantly corrupt government. Regardless of the good economic numbers reported by New Delhi — e.g., 7.5 percent gross domestic product growth, a 3 percent increase in government revenues, 2 percent inflation and corporate profits gaining 16 percent — I'm mindful that New Delhi's bureaucrats and politicians are genetically incapable of speaking the truth. From my catbird seat, it looks as if the Indian market and the Indian economy are topping out.
Mark Twain humorously divided the world into two kinds of people: those who have seen the Taj Mahal, which is terribly disappointing, and those who haven't. A similar comment could be said of American investors; there are those who are familiar with Indian investment opportunities (they are few) and those who are not (whose numbers are legion).
There are two major stock exchanges in India. The Bombay Stock Exchange, established in 1875, is located in Mumbai and lists over 6,000 companies. The BSE is among the world's largest based on the number of shares it lists. The National Stock Exchange of India, also based in Mumbai, founded in 1992, has most of the sophisticated electronic and computer trading systems found on U.S.
Why would you invest in a country about whose language, people and culture you know nothing — particularly one with an accounting system that only accounts for what looks good and doesn't conform to U.S. standards? Dividends are paid in rupees. Financial reports, published in Hindi or Bengali, read like comic strips. And the Indian version of our Securities and Exchange Commission reminds me of a Keystone Kops comedy. Fraud, self-dealing, insider trading and cooked books are rampant and accepted business practices. The Indian market is as risky as the Chinese market, and when the economy slows, which will be sooner than later, equities will fall like coconuts from tall trees.
If you must commit financial hara-kiri, consider the iShares India 50 ETF (INDY-$27), which owns 50 of India's largest equities. State Bank of India, ITC, Sun Pharmaceutical Industries, Tata Consultancy Services, ICICI Bank, Infosys, Reliance Industries and Housing Development Finance Corp. are several of the best-known examples. The return to date is negative 8.05 percent, and the niggardly 15-cent dividend yields 0.54 percent. Or consider the Standard & Poor's CNX 500 (CNXFIVE.NS-6,583.22), India's broad-based stock market index, representing approximately 96 percent of the NSE's market capitalization and 93 percent of the NSE's trading volume. The CNX's 500 companies are segregated into 73 industry indexes so that an industry's weight in the index reflects its influence in the market. For instance, if the pharmaceutical sector has a 4 percent weight among the 500 stocks traded, the securities in that index would also have a 4 percent weight in the index. The CNX is almost 1,000 points from its 52-week high of 7,428.10. Are you listening?
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at firstname.lastname@example.org. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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