Be fearless when others are fearful!
Stock market investing is not a daily activity. You must give your money time to grow. It grows as it rides through economic and stock market cycles over the years.…
What do rising interest rates mean to your portfolio?
In a surprise move last Wednesday, the Reserve Bank of India's monetary policy committee hiked key borrowing rates to curb rising consumer price inflation (CPI). The upward limit of the…
Generating “Alpha” on your investments
The volatility in the stock market is not for the faint-hearted! If you thought you could strike bargains when share prices drop, markets could be brutal to your position. While…
Omicron – Pandemic or Endemic?
As we end this calendar year, the battle against the pandemic seems well set to continue into 2022. According to early reports, Omicron, the latest variant of the COVID-19 virus,…
Is the World on a Rebalance & Reset Mode?
It was an era of excesses. With the US Federal Reserve considering slowing down bond purchases faster than before due to rising and stubborn inflation, it could be a beginning…
Are IPOs headed for a Secular boom?
There are only two things wrong with money: too much or too little. Charles Bukowski, a German-American author whose literary work revolved around the poor in America, said that in…
Crystal Ball Gazing: Stock markets in 2022
The best thing about quantitative easing is that it works in practice but not so in theory. Ben Bernanke, the then US Federal Reserve chairman, said that in 2014, the…
Investing lessons from the pandemic
Narratives are significant vectors of rapid culture change, zeitgeist, and economic behaviour. Nobel laureate and renowned economist Robert J. Shiller wrote that in his book on Narrative Economics in 2019. There…
Inflation and Stock Markets
When important government institutions announce critical decisions, one has to go beyond the obvious implications of those decisions. This is clearly evident in financial markets. When central bankers worldwide almost unanimously cut policy interest rates and infused liquidity in financial markets to revive economic growth, there was a critical outcome which prudent investors and observers had to bear in mind: Inflation. The resultant impact simply can’t be ignored. Increasing supply of liquidity and loose monetary policies globally ensured rapid resumption of asset prices and economic activity. But the increase in money supply also creates a real inflation challenge.
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Quantitative easing as an antidote to Black Swan events
Unforeseen events are a part of our life. But the possibility of things which may appear to be remote or even outlandish may occur anytime. And when such events happen, they change the direction of the way we think or live our lives considerably. A case in the point is the recent widespread of the Coronavirus which has changed the way we work. Such unforeseen and extraordinary events are termed as Black Swan events. Finance professor and trader Nassim Nicholas Taleb made this expression popular through his books which cover this aspect in the most detailed manner. Black swan events have a deep impact on economies. Demand in key sectors of an economy is disrupted. And most experts and analysts find it difficult to forecast the direction of demand. In such delicate situations, central bankers have been unanimously following the strategy of quantitative easing (QE), which began in early 2009. QE has had a deep and lasting impact on asset prices which have a direct beating on the underlying health of the global economic engine. So, what exactly is “quantitative easing” and how does this affect “investors”? Let us understand these nuances:
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