PLAN YOUR BET ON STOCKMARKETS....

Wednesday November 23, 2011
Political parties and stock returns by Sy Harding, editor Street Smart Report
The lead-up to next year’s election will bring a lot of claims from both parties. So we looked at the record over 50 and 100 years to see which political party in the White House is historically better for stocks.
I thought I’d check the historical record to make sure I don’t fall into the ‘lazy trap’ of repeating popular beliefs as fact when they might not be. I was more than mildly surprised by my research. It’s common knowledge, popular belief, historical fact, that the Republican Party is better for business, corporate profits, and the stock market – isn’t it?
Democrats are more interested in pushing socialistic programs at the expense of business – aren’t they? But wait a minute! Here's a look at the Dow’s gains and losses under Republican and Democratic Presidents over the last 50 years.

•Kennedy/Johnson (Dem) administration (1961-1965) - up 41.9%

•Johnson (Dem) administration (1965-1969) - up 8.1%

•Nixon (Rep) administration (1969 to 1973) - up 7.9%

•Nixon/Ford (Rep) administration (1973-1977) - down 0.1%

•Carter (Dem) administration (1977-1981) - down 4.1%

•Reagan (Rep) administration (1981-1985) - up 25.6%

•Reagan (Rep) administration (1985-1989) - up 79.0%

•Bush Sr. (Rep) administration (1989-1993 - up 52.3%

•Clinton (Dem) administration (1993-1997) - up 95.3%

•Clinton (Dem) administration (1997-2001) - up 67.3%

•Bush Jr. (Rep) administration (2001-2005) - unchanged

•Bush Jr. (Rep) administration (2005-2009) down 18.6%

•Obama (Dem) administration (2009 through Oct. 30, 2011) - up 36.3%

Over six Democratic terms the Dow gained 247.9%, or an average of 41.3% per term. Over seven Republican terms the Dow gained 147.1%, or an average of 21.0% per term.
Could it be? Over the last 50 years, investors have made almost double the returns under Democratic Presidents as under Republican Presidents?
I then went back 110 years to 1900. The same pattern emerged, although the difference was not as striking as it has been for the last 50 years.
From 1901 to 1961 the Dow increased an average of 36.7% per term when the president was a Democrat, and 32.1% when a Republican was in the White House.
The influence of one party or the other on the strength of the economy, business prosperity, and the stock market has clearly not been as popular wisdom suggests.

ANALOGY- US-ELECTIONS AND PERFORMANCE...

Presidential election cycle: Stocks and profits?


A market historian reviews the long-term pattern of stock prices and the Presidential election cycle.

By TheStockAdvisors on Fri, Jan 27, 2012 1:38 PM
By Jim Stack, Investech Market Analyst
What lies ahead in 2012? That’s the big question, and the fact that we’re approaching a Presidential Election likely improves the chances that this will be a good year for the stock market.
Historically, there has been a clear visible link between the Presidential election cycle and Wall Street. Below, we look at the correlation between cycles in the stock market and the 4-year election cycle.
Off-election years are often preceded by bear markets or stagnant growth and typically provide some of the best buying opportunities for stocks.
However, one rarely sees the market swooning in the 12 to 18 months leading up to a Presidential Election – 1960 and 2008 are the notable exceptions.
If you think about it, this relationship makes sense. Any politician worth his salt knows that you should try to get bad news and bear markets out of the way as quickly as possible after taking office. That way, the economy and the stock market can get back on track and be ticking along smoothly when it’s time to run for re-election. You rarely see Washington passing controversial tax hikes or legislation once the Presidential campaigns get rolling in earnest, and even the Federal Reserve, which is not supposed to be politically influenced, is reluctant to rock the boat.
Historically (since 1941), the first two years after a Presidential Election have the lowest performance, with average annual gains less than 5.5%.Year 3, as politicians start gearing up for re-election, is usually the best on Wall Street by a wide margin. With an average gain of 17.3%, it more than doubles the return of the other three years.
Presidential Election years tend to be more moderate, but historically are still the second most profitable in the cycle. Before the financial crisis, the average annual gain for election years was 8.9%; however, the 38% drop in the S&P 500 in 2008 reduced the long-term average to 6.2%.
The current 2009-2012 Presidential Election cycle is anything but “average.” After the 2008 debacle, the bull market recovery came early.
Years 1 and 2 were far stronger than usual, which likely stole performance from Year 3. Consequently, 2011 fell far short of expectations, ending with 0% gain in the S&P 500 after it suffered a sharp bearish contraction mid-year. Although the progression up to now has been atypical, what are the odds that this election year will be closer to the norm? In seeking the answer we looked back at prior cycles, where historical precedent has not always prevailed.
Election years can be volatile (what years can’t), but they rarely end with big losses for investors.
We looked at every Presidential Election year since 1900 along with the gain or loss in the DJIA (excluding dividends). Note that:
•The average gain for these 28 election years is 7.3%, which is equivalent to the average annual market gain taking all 112 years into consideration. However, if we exclude 2008, which was the worst Presidential Election year in over a century, the election year average jumps to 8.8%.
•Two-thirds of the periods were positive for the market, while years with major losses were rare.
•Election years that showed double-digit gains outnumber those with double-digit losses by nearly 3:1 – and only one of those double-digit losses occurred after 1940. That was in 2008 when the economy was deep in recession at election time (which was also the case in 1960), and it cost the incumbent party dearly at the polls. Our study also revealed another secret in Presidential Election years… the market often rallies in the second half of the year.
• In all but six election years, the DJIA either hit a new yearly high, or came within 5% of the year’s high, in the 4th quarter.
•There have been only five elections where the market dropped to a new yearly low in the 4th quarter, and three occurred during major recessions – 1920, 1932 and 2008.
•In 2004, the 4th quarter saw both extremes. The low was hit in October, and the DJIA rallied to its high for the year in December.Looking at 2012, the year has started off with good news on the economic front – leading data is improving along with confidence and recession fears are receding. Also, the technical picture is more encouraging, with stronger market breadth and the disappearance of bearish distribution.
In our opinion, this evidence, along with the Presidential Election Cycle, reduces the chance that this will be a down year for the market.
In our Model Portfolios, we are currently 77% invested, but we’ll likely step up from this level if fundamental and technical models continue to improve.

INDIA CELEBRATED 63rd REPUBLIC DAY...

The World Congratulated, every INDIAN feel proud of the movement.

"The difference between what we do and what we are capable of doing would suffice to solve most of the world's problems" -Mahatma Gandhi

I believe the philosophy like " Work hard, make smart moves with Result Oriented Planned Efforts-approach to achieve your goals and differentiate with SUCCESS". 

My whole life revolving around the Indian Stock Market, ever since I started from 01-07-1987.

PEOPLE WHO MAKE THE DIFFERENCE......

HAPPY REPUBLIC DAY….

24 JAN, 2012, 10.24AM IST, KAUSIK DUTTA,ET BUREAU 

Amitabh Jhunjhunwala: Journey from a CA to Anil Ambani's top man

MUMBAI: It's not just blind loyalty that keeps Amitabh Jhunjhunwala and Anil Ambani together. Those who have seen the duo working together for years say it is a similar bent of mind that is responsible for the near-perfect fit. "There's nothing profound about his decision to follow Anil when the latter left Reliance Industries. Had he been an engineer, he would perhaps have continued with Mukesh," says a senior executive at the ADAG group. 

The two met for the first time in the early 80s when Jhunjhunwala, as cofounder of a CA firm, visited Reliance, one of his clients. Ambani was then in charge of finance. Ambani was impressed and, by 1993, persuaded the young CA to join a fund house brotherin-law Shyam Kothari had founded called Kothari Pioneer. 

A year and a half later, he came in as CEO of the newly-floated Reliance Capital, which started as a fund house and over the years transformed into a supermarket for financial services. Interestingly, Jhunjhunwala had co-founded the CA firm with Akhil Gupta, who is today to Bharti Airtel's Sunil Mittal what Jhunjhunwala is to Anil. Along with finance, the two share a passion for the entertainment business. 

That explains Anil's determination to get a foot into the door of Steven Spielberg's DreamWorks, the iconic Hollywood studio. Since that JV got underway , Jhunjhunwala has been closely involved with it; those working with him recall how he got misty-eyed when the studio received a letter from Neil Armstrong for the good restoration work of NASA's film on the first man stepping into the Moon. 

Yet, on many fronts, they're as different as cheese is from chalk. Whilst the professional keeps a cool head, the promoter is known to be excitable ; Jhunjhunwala is a light eater, the latter loves food; the former shies away from the limelight-he refused to comment to ET for this feature -- the chairman has thrived in it. Those who work around the duo point out that Ambani has played to Jhunjhunwala's strengths and accordingly given him responsibilities. 

For instance, his passion for human capital convinced the promoter to put him at the helm of businesses like media and entertainment and financial services. That gambit has worked at Reliance Capital, which with Jhunjhunwala as CEO diversified into life and general insurance; he also took Reliance MF to the top of the fund house sweepstakes. He built the entertainment business from scratch: the group acquired Adlabs in 2005. 

Now it's into radio, multiplex and film production. The creative and artistic bent may be courtesy of his mother, says a close friend of Jhunjhunwala, who was a journalist of repute, a Padma Shri awardee and an organiser of Kavi Sammelans at their Delhi residence. In fact, Jhunjhunwala even published a finance magazine called Money Matters for a year before he joined Kothari Pioneer. 

People who work with him at the entertainment venture say Jhunjhunwala looks forward to meeting Spielberg -- they meet least once a quarter -- and relishes the opportunity of meeting Hollywood stars who feature in DreamWorks' movies. Back home, however, the realities for the group are not all rosy. For starters, the combine has to find a way to reduce the mounting debt at Reliance Communications ; at last count it stood at Rs 39,000 crore, Rs 10,000 crore more than its top line and two times its market value. 

Their critics add that their record is far from unblemished on the finance front. For instance, they have not done any substantial acquisitions, although they attempted a few (the list includes two abortive attempts to buy South African telco MTN). Then, they may have overpriced the initial share of the group's power arm; and their mutual fund recently slipped to the No. 2 slot. 

The biggest challenge for the Ambani-Jhunjhunwala team is to prove that they are as good at executing projects as they are at spotting growth opportunities and raising capital for them -the group companies have some Rs 80,000 crore worth of infrastructure projects that have to be completed. For the next few days, however, Jhunjhunwala will be focused on one of the biggest projects of his personal life - the wedding of Abhinav and Prerna.

The article is very important to understand the future Indian Stock market shape...Please do read....

The Euro Zone crisis could mark the end of a paradigm adopted by the East Asian ‘Tigers', and later, China.
January 25, 2012: With the Euro Zone crises showing no signs of improvement and the prospect of recession confronting various member-states, how will the rest of the globe be affected?
The most obvious way was pointed out by the recently by WB and ADB in their respective outlooks for the global economy. In its Global Economic Prospects 2012 report, the bank urged developing countries to re-evaluate their “vulnerabilities' in the light of “dimming global growth prospects and the Euro debt problem.”
With surprising alacrity, India responded by admitting ahead of the Reserve Bank of India's third-quarter monetary policy review that the next two quarters could be “difficult”. For its part, the central bank stayed with its rates intact, but reduced CRR by 50 basis points to pump in liquidity. That was, at best, a symbolic gesture, because growth is decelerating, not so much on account of liquidity, but because, well, what is one to do with all those extra funds? Cash-rich firms are staring at a bleak policy environment, a bleaker investment landscape and scouting overseas or venturing sideways into acquisitions; but that won't add to the economy's overall corpus of productive investments.
In its global outlook for 2012, the Asian Development Bank repeated its pessimistic outlook for last year, reducing expansion yet again to 7.2 per cent for the East Asian region. As the Euro debt crisis deepens, the ADB warned, export-oriented nations in ASEAN, including China, would be affected, with lesser exporting nations becoming more vulnerable.
MODEL AT A CROSSROADS
What both the WB and ADB have cautioned against is the possibility of a full-blown financial and economic crisis; both wish policymakers in the region respond “decisively and collectively” to the crisis. Already, China, for instance, has recognised its own vulnerability, and is now ruefully examining the economy's structural imbalances.
The East Asian ‘tigers' or super-exporters are no less affected by the downturn in export demand. As recession kicks in with austerity measures in select Euro Zone countries, rising protectionism may compound the problems for East Asian super-exporters, warns ADB.
At a more fundamental level, what we may now be witnessing is a crisis in a development paradigm that had acquired the character of a synodal decree in the last three decades of the twentieth century.
The export-led growth strategy, first tried out by Japan following its post-WW-II reconstruction, rode roughshod on the extant import-substitution model that populist democracies like India had touted as the most appropriate model for developing countries. Exports inspired the success story of East Asian ‘Tigers' since the 1970s.
By the 1980s, the East Asian ‘tigers' had turned the export-led strategy into an inspiration for almost every developing country, confronting cumulative economic backwardness manifest in abundant, unproductive labour and non-traded goods in South-East Asia.
The ‘Tigers' — South Korea and Taiwan in manufacturing and high-tech, and Singapore and Hong Kong as global financial hubs — inspired the ‘tiger cubs', Malaysia, the Philippines, and Thailand, though with mixed success.
But it was when China stepped out in the latter half of 1978, virtually copying the model of export-centric industrial expansion line by line, that the model received its apotheosis.
Focusing on East-Asian policymaking as a key to its phenomenal success, Robert Wade's Governing the Market, in 1992, provided the most lucid and polemical statement of export-oriented growth in South Korea and Taiwan, with the state partnering markets in a synergistic allocation of resources to maximise productivity and output.
American and European expansion helped. In the 30 years to the end of the century, the export-led strategy catapulted nations with few natural resources, cheap and abundant labour, low industrialisation and lower per capita incomes, into high-powered economies and rising trade surpluses.
The strategy had a transcendental spin-off. Nations that were, in their early industrialisation efforts, scorned for poor quality, were now crowned with the reputation for quality at the best price: first Japan, then the East Asian economies and now, with its high-tech quality exports, China.
ZERO SUM GAME
In 2003, Thomas Palley of the Open Society Institute pointed to the dangers of a ‘demonstration effect' that was turning the export-oriented strategy into a zero-sum game by “poaching of domestic demand elsewhere, or by displacing exports of some other countries.”
As he wrote, “The evidence shows that there is significant cross-country crowding out, with exports to the US from the four East Asian tiger economies (Taiwan, South Korea, Hong Kong, Singapore) being subject to a large crowding-out effect from China.”
But export displacement wasn't a problem for the US or European consumers, who were just too happy with ever-cheaper products.
During the years, and on a global scale, an imbalance was working into flash points of newer tensions. The globe was now getting crowded with more exporters than were importers, more producers than consumers.
And it really began to pinch, when September 2008 set into motion an economic crisis that brought to the surface a simmering spat between China and the US regarding the latter's policy-driven exchange rate.
With a larger number of exporters and contracting import markets, the currency tension between China and US spread wider, since every exporting country wanted to retain a price advantage. Soon after 2008, when the effects of the Wall Street meltdown began to work into a recession, the US wanted even Germany to appreciate its currency; and when exporters didn't buy its argument, the US began “quantitative easing”, driving the dollar down.
RETHINK IN CHINA
The current economic crisis and its contracting demand for imports will strike at the very heart of the model of export-oriented growth, forcing a re-evaluation of its basic premise, even as policymakers contend with falling GDP rates down the line.
More so China than East Asia: in Beijing, policymakers may have already started pondering structural imbalances intrinsic to the growth model itself.
Director, China Centre for Economic Research, Yang Yao, says that owing to cheap labour and suppressed remuneration, returns from exports have flowed mainly to capital and to the treasury by way of tax revenues. Since the share of labour incomes has been declining, so has the share of consumption in GDP. Raising domestic demand may mean an inward-oriented strategy of growth.
That may sound familiar to Indian policymakers, but then there are only so many concepts to fool around with.
http://www.thehindubusinessline.com/opinion/columns/ashoak-upadhyay/article2831736.ece?homepage=true

Rosy looks.....

The makets are in jubiliance of FII inflow as the cash chasing the stocks is now unstopable. The markets are recovered from the lows and continue to consolidate at these levels for some time. Please do read my earlier postings in which I categorically said that the support at 4600-4500 for Nifty. Also mentioned that it doesn't matter whether it is 4400 or 4500. I recommended certain shares like Rel cap and RelInfra, most beaten down made a huge short covering rise, but people made lot of money.
Now the Nifty is well above the psycholical support of 4850-4900.The news flow will be good from now but the markets will ignore that to reflect in the price, but the news already priced in. The classic example is LT and BHEL. Now the news flow is -CAPITAL GOODS will do well infuture.
The RBI cut CRR ratse by 50 basis points is also a surprise to me. But the fact is that the market participants heavyly betted on the bull side that the RBI will make a rate cut atleast by 25 basis points.So there is a huge bonus. The liquidty in the system increased by 32000 crores is a good sign.I have my reservations at this point. The RBI is worried about growth rate and tight liquidity in the system but was encouraged by the falling inflation, gave confidence for a rate cut.
But the external market arround is not condussive to absorb the investments and make returns out of it. Then, the free availability of the cash may push for a bad investment decisions. As of now our growth at arround 7% is not a bad sign. So the RBI should have continued this tight CRR policy and used a OMOs for liquidity generation. The Open Market operations could have become as and when-infusion, rather than a blanket. Now our growth is surviving on the internal consuption and external dependency as usual. Now the markets are celebrating with Cheers!!!. Later the NPAs of banks will increase. The deffered/delay in payments will turn out to become as NPAs with cyclical effect that passes on from one sector to other and the industy will suffer badly.The Govt would have taken enough steps to boost the spending and would have generated some demand rather than allowing the industry to face the external music directly.
Now the markets are enjoying and will enjoy because of the short term euphoria of liquidity inflow and the STOP LOSS triggering. Techically the markets are now in bull grip. So long as SBI floats above 1860 level, the markets are in bull grip. The Nifty is enjoying the support of Reliance and the Banking majors. the only under prformer is HLL. I posted the reasons why HLL will under perform in my previous posting.The markets will be in bull grip due to DAVOS and in India at least till the first week of March-12.you know why?.....

cross roads but positive...

The Reliance results are disappointing but the buyback offer at 870 with more than 10,400 crores to purchase 12 crore shares. This is all to offset the bad news and keep the bears away. The history shows that Ambani family is not serious in buying. The RelInfra case of buy back is also became a joke. They promised to buy above 1200 but the stock came to 350 levels, the promoter himself did not subscribe to preferential issue. So they buy but they don’t. The new SEBI guidelines forces to buy at least 25% may whip for that portion.

The banking stocks are giving good results but the NPAs are increasing, seriously to alarming state. The following quarters will see more and across. The payment delays to defaults will start opening up. The good news is that the FII bought 1.16 billion dollars of stocks from Indian markets. They postponed in December, low valuations attracted, fueled by Rupee depreciation.

Technically speaking the strength of market to scale new highs is waning. The up move may get resistance at 5080-5180 for some time. The bottoms are well knit at 4830-35 and 4750-60 levels. So the bears also have limited opportunity to pull it down.

The Infy weak results, TCS is ok and Wipro is good likely to balance the tech sector as a whole. The Infy may !!!

Yesterday I couldn’t publish…..

I AGREE WITH THE AUTHOR...I AM HAVING SAME VIEW IN INDIAN MARKETS????......

Is Wall Street manipulating this rally?

As traders push stocks slowly higher, blissfully ignoring all that's still wrong with the global economy, there's evidence that something is amiss.

By Anthony Mirhaydari on Fri, Jan 20, 2012 12:56 PM

Stocks inched up Thursday for the 10th day out of 12 trading sessions in 2012, pushing various technical indicators deeper into oversold territory and reaching levels not seen in many cases since late last April, when stocks were putting in their bull market high. Volume and breadth were pathetic. Up volume accounted for only 65% of total volume on the NYSE.

All that matters, apparently, is that the European Central Bank dumped just over €200 billion in three-year money into the system a few weeks into a long-term refinancing operation to supply capital to banks. While not exactly like the quantitative easing done by the Federal Reserve a few times, this LTRO looks, smells and tastes just like the Fed's QE1 and QE2 to the Wall Street fat cats worried about their bonuses.

And they're using every trick in the book to juice the market higher. But here's the thing: Regular investors aren't buying what Wall Street is selling.

Just look at Thursday's action.

Investors ignored a batch of mostly bad news. There was a disappointing Philly Fed manufacturing report. Greece continued its efforts to negotiate a voluntary debt reduction with its bondholders, many of whom, as you know, are hedge funds that have undertaken a "basis trade" using credit default swaps and are poised to cash out no matter what happens (and therefore have an interest in holding out for the absolute best possible deal).

And there was some disappointing earnings news, too, in what is shaping up to be the worst earnings season (based on positive earnings surprises) since 2001, according to Sundial Capital Research. 

In response, Wall Streeters are buying now, asking questions later, and are beginning to foam at the mouth as they push their bets to try to encourage a buying frenzy. This, in turn, is pushing sentiment measures based on things like options trading, analyst sentiment or the relative volume in the Nasdaq vs. the NYSE to extremes.

Boy, are they pushing. TrimTabs compiled a list of data points showing the extreme optimism on Wall Street:

• Short interest at New York Stock Exchange members plunged 10.5% in December to the second-lowest level of the past two years.
• Options traders are growing more complacent. The put-call ratio averaged just 0.81 on the past five trading days, the lowest five-day average since July 2011. 
• The VIX fell to 20.5 on Jan. 12, the lowest level since July 2011.
• Of the hedge funds TrimTabs surveyed in cooperation with BarclayHedge in December, 42% were bullish on the S&P 500, while 30% were bearish. That level of optimism was the highest since July 2011.
• Investors Intelligence reports that 51.1% of newsletter writers are bullish, the highest level of optimism since April 2011, when the U.S. stock market topped out.
• Bank of America's survey of global fund managers found that asset allocators are more bullish on U.S. stocks than at any time since April 2010.

Despite all this, average investors are staying on the sidelines. TrimTabs estimates that U.S. equity funds have received only $3.3 billion in new cash so far this month, which is historically a very heavy month for inflows. Compare that with the $932 billion that flowed into checking and savings accounts, eight times the $117 billion that went into stocks and bond funds as well as ETFs.

Thus the low-volume, narrow-breadth, low-volatility grind higher we've witnessed so far this month. But here's the thing. The half-life of extraordinary monetary policy efforts is falling fast. Very fast.

It lasted for a year starting in March 2009 -- that was QE 1.5, when efforts announced in November 2008 were expanded -- thanks to the tailwinds from the market discounting the end of the recession and the end of the financial crisis. It lasted about seven months when QE2 was teased in August 2010 and was helped by the calming of the eurozone crisis after the first Greek bailout.

Now we're already in the third month of this new European variety of central bank largess.

Yet the economy faces a number of headwinds that are not going away: There are sovereign debt issues, fiscal austerity, rising trade protectionism, the debt-ceiling debate, the rise and fall and rise again of crude oil, a stalling of earnings growth, a whiff of inflation, moribund banks, a spate of elections, and mixed economic reports with sentiment high but job growth and housing still anemic.

Until this dynamic changes, we're stuck in the mud. The Fed, or the ECB, might try to pull us out with lifelines of cheap cash -- but that is now just making the problem worse by fueling inflationary concerns. Just look at the rise in shelter costs due to a tight rental market, a major component of the Consumer Price Index.

Wall Street isn't looking that far ahead, I guess. But folks on Main Street, the ones who are watching at-the-pump prices rise again as those holiday bills come due, or are trying to find a nice rental home, already know what's coming. And it's not good.