HAPPY INDEPENDENCE DAY !!!
LAST ONE YEAR CHANGE
15/08/15 vs 15/08/16
SENSEX 28067 vs 28152 (+0.30%)
NIFTY 8518 vs 8672 (+1.81%)
GOLD$ 1115 vs 1339 (+20.09%)
GOLD(Rs) 25768 vs 31220 (+ 21.16%)
SILVER(Rs) 35429 vs 46130 (+30.20%)
Rs/$ 65 vs 66.90 (+2.92%) 💥
Freedom Was Not Gifted To Us,
It Was Snatched By An Unstoppable Fight,
Fighters Painted With Blood On Their Life’s Canvas,
Still They Never Turned Back With Fright!
HAPPY INDEPENDENCE DAY !!!
What is Brexit and what would happen if Britain left the EU?
What is 'Brexit'?
It's the issue of whether Britain should exit the European Union or not —
a question that will be decided in a historic referendum on June 23.
a question that will be decided in a historic referendum on June 23.
What is happening?
A referendum to decide whether Britain should leave or remain in the European Union. Prime Minister David Cameron promised to hold one if he won the 2015 general election, in response to growing calls from his own Conservative MPs and the UK Independence Party (UKIP), who argued that Britain had not had a say since 1975, when it voted to stay in the EU in a referendum. For a start, those wanting Britain to leave the EU see it as an opportunity to reassert British national sovereignty and in a sense liberate Britain from the bottlenecks of EU both politically and financially.
What is the European Union?
The European Union - often known as the EU - is an economic and political partnership involving 28 European countries . It began after World War Two to foster economic co-operation, with the idea that countries which trade together are more likely to avoid going to war with each other. It has since grown to become a "single market" allowing goods and people to move around, basically as if the member states were one country. It has its own currency, the euro, which is used by 19 of the member countries, its own parliament and it now sets rules in a wide range of areas - including on the environment, transport, consumer rights and even things like mobile phone charges.
Why do they want the UK to leave?
They believe Britain is being held back by the EU, which they say imposes too many rules on business and charges billions of pounds a year in membership fees for little in return. They also want Britain to take back full control of its borders and reduce the number of people coming here to live and/or work. One of the main principles of EU membership is "free movement", which means you don't need to get a visa to go and live in another EU country. They also object to the idea of "ever closer union" and what they see as moves towards the creation of a "United States of Europe".
Advantages of Brexit
Economically, Britain would immediately save $12 billion a year in EU budget payments. Freed from famously cumbersome EU regulations, Brexit supporters say, Britain would attract greater investment and become a more dynamic economic hub — particularly if it still had full access to the EU's tariff-free single market. But that's a big if, and would rely on Britain renegotiating a new trade deal with the EU's remaining 27 member states — many of whom, post-Brexit, would want to make a bitter example of the U.K., to discourage other members from fleeing.
Under the EU's labor rules, any citizen of a member state has the right to live and work in another member state — a rule that has allowed some 942,000 Eastern Europeans to move to the U.K. as the EU has expanded its borders. Brexiters say these migrants have overwhelmed the housing system and abused Britain's generous in-work benefits. At least 34,000 of them are getting child benefits for children who do not even live in the U.K. and sending that money — totaling about $42 million a year — back to their home countries. Leaving the EU would allow Britain more control over how many migrants are allowed to enter. That's become a big selling point after the influx of 1 million refugees into EU countries.
Risks of a Brexit
The uncertainty it would create could destabilize the markets and cause the pound to plummet.
Some extreme predictions are that a Brexit will blow a £100 billion hole in Britain's economy,
and Britain will lose 3 million jobs!
What
is the probability of Brexit?
According to Economist as on today, 44% People Vote for Leaving Europe,
42% for Remaining in Europe and 10 remain Undecided.
Performance vs Outcome
1.
Coca-Cola is fighting 12 consecutive years of soda
consumption decline. Its stock is at an all-time high.
2.
Tesla is changing the world, and orders for its new car
are off the charts. Its stock is at 18 months low.
3.
Cigarette consumption has dropped 44% since 1981.
Altria stock is up 71,000% since 1981.
4.
WalMart net income has tripled since 2000. Its stock
has lost 1.5% since 2000.
5.
Apple has earned almost a quarter trillion dollars of
profit since 2012. Its stock has barely budged.
6.
Amazon's profits round to zero since 2012. Its stock
has tripled.
7.
2009 was one of the worst years for the economy in a
century. The market rose 27%.
8.
2015 was a good year for the economy. The market rose
1%.
9.
Brazil's economy is a disaster. Its stock market is
flat over the last two years.
10. US
is enjoying the longest streak of low unemployment claims in 4 decades. S&P 500 is flat over the last two yrs
And so on.
I'm fascinated with the problem of why really smart people have such a hard time predicting the future. It's mostly because the future is more random than we think. But it's also because future performance (like earnings and economic growth) doesn't tell you half of what you need to know to predict future outcomes. Outcomes are determined by performance within the context of expectations, with importance heavily weighted toward the latter. And if predicting future performance is hard, calibrating them against expectations is close to sorcery.
Even if you accurately forecast future performance, predicting the outcome from that performance requires answering two questions:
Are current expectations reasonable? What will future expectations be?
The first is possible to answer, but pretty hard. We can look at sentiment and valuations to gauge, based on past trends, whether the current mood seems reasonable. But disagreeing with popular sentiment is easier said than done. Few things feel better than fitting in, and having a viewpoint that goes against everyone around you is a mental battle not one person in a ten can maintain for long. Rather than identifying extremes in current sentiment, it's easier to justify the market's mood no matter what it is. Billionaire investor Howard Marks once wrote:
The problem is that extraordinary performance comes only from correct non consensual forecasts, but non consensual forecasts are hard to make, hard to make correctly, and hard to act on.
The second – predicting future expectations – is even harder. To know where stock prices will be in five years, I have to know what mood people will be in five years from now. Which is as ambitious as it sounds. Ask yourself what kind of mood you yourself will be in April 2021, and you'll shake your head in laughter. Ask what kind of mood seven billion strangers will be in April 2021 – that mood, of course, will determine stock prices in five years -- and it's hard to keep a straight face. This is where the disconnect between performance and outcomes occurs:
Accurately predicting five years of economic growth might not do much for the stock market if, five years from now, people are worried about the future five years from then.
As Ben Graham said, "In the short run, the market is a voting machine. But in the long run, it is a weighing machine." Even if future markets are gloomier than they are now, rising profits and compounding business assets can leave investors with a positive return. This "weighing" is why true long-term investing isn't gambling. Real value is created, even if we know exactly when it will flow to shareholders' pockets.
But the more precise we try to forecast, the more we rely on predicting emotions and expectations. In a world where analysts focus most of their time analyzing performance – what earnings will do, or what the economy will do – and it's no wonder we struggle to predict outcomes.
NIFTY 2007 - NIFTY 2015
Now some amazing facts !!
- Out of the Top 20 stocks in 2007 only 10 remain in 2015 in the Top 20 weights.
- Out of top 20 in 2007 there are 4 stocks which are not part of Nifty. ( RPL got merged in RIL ). This constituted 11.67% of Nifty.
- Out of the Top 10 weights in Nifty only 3 remain in Top 10 of 2015. These 3 constitutred 20.03% of Nifty and are now only constituting 14.95% of Nifty.
- The top 4 weights of 2015 Infosys/ hdfc bank / hdfc / itc now command a weight of 28.85% but used to command only a weight of 9.95% in 2007 !! -------------- ( WOW )
- Reliance Industries and Reliance Petroleum i.e RIL an RPL had a combined weight of 14.56% and now its only Reliance with a weight of 5.91% ------------------ ( WOW)
- Rcom was the 7th largest weightage in Nifty is no more part of it. Even Unitech was at the 16th place.
- ONGC the 2nd largest weightage on Nifty is now at the 21st place. From 7.13% to 1.56%.
Sectoral Changes
- The big sectoral shift has been from Oil and Gas to Banking. Oil and Gas was at 24.46% in 2007 and is now 9.14% and Banks were 11.46% are now 23.94%.
- Telcom was a darling in 2007 with a weightage of 11.26% and now closer to 2.1%.
- IT was at 7.2% in 2007 is now at 15.02%
- Metals and PSU banks weightages have reduced by half.
- The big shift is Nifty was an index which in 2007 had majority of the index tilted towards investment linked sectors such as Oil * Gas, Telecom, Power, Industrials. This has now shifted towards sectors which are Banks, Financials, export oriented - IT and Pharma
- Such a shift is a major reason for polarization in sectoral/stock performance and Nifty.So we have a bunch of stocks down 50-70% but Nifty is up 20% since 2007.
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