What about Premium & Value picks with Modi's Rs 500 & 1000 note ban ?

Ban on Note effects

On 8th Nov I was returning after visiting Golden Temple in Amritsar. It was late evening & my family was admiring the quality of Shatabdi's interiors n hospitality. To me money equalled comfort at that time

But suddenly there was a wave of some rumour spreaded in whole train like a wildfire, amazingly my whatsapp messages started piling up with the same rumour.

To my surprise what initially sounded like a funny & idiotic rumour turned out to be true as soon as I internet searched the same on late Tuesday. Prime Minister Narendra Modi banned 500 and 1,000 notes effective midnight, sweeping away 86% of total currency in circulation.

Paytm, India's largest digital wallet startup, hailed the move in the morning newspapers as it splashed Modi's photograph in a full-page advertisement.

What's is the impact on businesses ? I must say WIN some LOSE some... right ??

I have contemplated on this Macro economic change long & hard for past week as I too stood in line outside Bank n also saw empty shops in rush hours. It becomes important to address this keeping our vision of 'Fight against Sattebaaji'

Here are my findings.

Value picks & Modi's 500 & 1000 note ban

News are reporting that shopping malls and markets across the country have reported up to 50% fall in their business in the first weekend after the demonetisation of 500 & 1000 note.

Local market places such as Karol Bagh in Delhi and Crawford Market in Mumbai where transactions are mostly in cash were the hardest hit with footfalls in these markets falling by as much as 70%.

I must say Yeh to hona hi tha as most of these shopkeepers think themselves as Outside The System Smart-Asses.

But then it hits me that if train apply breaks then it eventually gives jerk to last bogey too. I am speaking metaphorically here meaning even though our value picks & premium picks are listed businesses with everything as white transactions & money but some of them do deliver product & services to these shopkeepers & malls.

So we are gonna get hit sooner or later, but let's break it down & draw some rationality out of it. After all valuguyz are Intelligent investors


Impact on Value & premium Picks

  • Let's be honest everything just got hit be it essentials, utilities or luxuries.
  • Since it is a state of Financial Emergency for our country my common sense says that everyone will re-organize there spending habits.
  • Essentials like food, clothing, utilities, education, communication, transportation etc will be least hit & should stabilize within 2 months.
  • Luxuries ki market to gayi 1-2 saal tak aaram se. Illegit money went down the drain so did the luxuries. See drop of 50-90% in this segment businesses turnovers.
  • Real estate bhi gya for next 1 year at least.
  • Value picks & premium picks which deals in product or services in essentials & export markets should land on feet with little bruises. They are still going to be stronger than ever.


Impact on Mr. Market

  • Even though liquidity is squeezed out of cash transactions but Mr. Market which is all White (legit) Money being emotional chick gotta react to it.
  • Business wise turnovers are negatively (-ve) hit so they should direct some sell off.
  • Since cash investing avenues like Real estate & Gold are literally frozen. Common sense says people will sooner or later try their luck at Mr. Market since it is all legit white money transactions.
  • Boom in IPO market will be seen soon as new Sattebaaj will start buying them as herd mentality rises.


Impact on Banking

  • Bank mota mota 2 kaam karta hai pehla deposit lena and doosra loan dena.
  • Banks have to maintain deposits/loan ratio so that they earn Interest on it with least risk, this is called ALM (Asset Liability Management) by banks.
  • Jab deposits tezi se badenge then Banks will be forced to ease the loan giving norms.
  • More deposits will easily help our RBI Governor Mr. Urjit Patel to decrease interest rates which in turn will increase liquidity in society & also in Mr. Market
  • This macro development will spike in more risky lending by Banks which might start creating future financial bubbles going forward


Making Sense

  • Sucking Cash out of system even for short period will definitely have 2 effects as follows.
  • 1. Spending habits will prioritize from giving essentials highest priority to giving lowest to luxuries in coming months. This effect is clearly visible if you visit your nearby markets.
  • 2. This effect is yet invisible but Increased lending & lower interest rates will spike liquidity of white money in businesses which will in turn find its way into bond markets & stock markets.
  • 1st effect will take Mr. Market down & 2nd effect will take Mr. Market to levels you can't even dream of.


What about ValueGuyz ?

What is a difference between a Sattebaaj & a Valueguyz ?? It is intelligent investing.

"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." - BENJAMIN GRAHAM

My thorough analysis of this demonetisation situation has 2 outcome. One reduces businesses turnovers but second outcome increases liquidity in system.

But my problem with this Macro-economic situation is that I have no idea what is scale of these outcomes, how much Mr. Market will react or How high it will go.

Not understanding the quantum of this macro-economic development and yet thinking of Selling off or buying more in the existing Value picks or Premium picks is a clear case of Speculation or Sattebaaji.

My strategy for valueguy remains same as discussed in Advance Course

Keep accumulating premium picks, value picks or your researched picks & keep exiting them as taught in the courses & don't worry much. Everything this Government is doing is ultimately going to be advantageous for us.

PLUS : Everything we do here at valuguyz.com is TAX FREE

Self-reliance is 1st human liberty. Trust yourself as a VALUEGUY & wonderful things will start coming to you.

regards,

jasmeet singh

Founder & Investor

SEBI Regd.(INH100004951)

Jasmeet Singh

About me :

Currently managing assets of 5 Crore+ & still sleep like a baby every night because Valueguyz makes life simpler.

I am passionate about 3 things in my life Financial System, Fitness & Photography

I got introduced to Financial system through Forex Trading back in 2007 during my 3rd Year of Engineering & It was too complex yet magnificent. Officially I entered Indian Stock Market in early 2008 at the very beginning of Global Financial Crisis, but what the hell did I know for me it was the last semester & time to get serious about my passion ie, Counter Strike

DISCLAIMER

This analysis is my personal opinion shared on public media (Blog) & is not a recommendation of any sort in any manner. I am currently not registered with SEBI in any capacity but in process of being a registered Research Analyst with SEBI. I have no financial interest in aforesaid company & don't hold any stock on the date of writing this post.