Just completed a 2 week travel through Bahrain and India. This trip was part business and part pleasure and here are some thoughts to share...
Bahrain is a liberal gateway to conservative Saudi Arabia and more. They are trying to emulate UAE/Dubai with some success. USA presence is there in spirit, if not in public, possibly due to the 9/11 incident six years ago. People are confident and future is bright and optimistic. And, the various sensitive issues are being bypassed through clever proclamations...
For example, in USA, we talk about lack of inflation, as measured by CPI. But, we know things are a lot more expensive than a few years ago. In Bahrain, we talk about Hedge and Mutual Funds compliant with Sharia Law, i.e. no interest charges for money loaned. But, you can purchase a car with no money down, as long as the selling price of the car is higher, if you wish to purchase car on monthly payments. No body talks about APR there.
But, I found that "There is no free lunch and that is still true in Middle East and in India". And, the basic laws of supply and demand apply everywhere, even if political leaders proclaim that they do not apply.
From investment view point, we are seeing various market indexes much closer to market top than to market bottom. India and China have controlled price of hydrocarbons like diesel and gasoline and that makes the demand inelastic. And, I like US system of floating prices based on supply and demand much more effective in correcting the supply and demand excesses.
Indian Financial markets are going through a correction in the IT segment and infrastructure stocks are exploding making a few Indians as richest individuals in the world. Infrastructure segment looks bubbly and toppy.
US markets are rolling over, as blogged several weeks ago. A lot of momentum stocks are topping out, hurting a lot of people chasing them.
AAPL, GOOG, RIMM and ADBE have corrected also ...
Just remember that capital preservation is a very basic ground rule and the return ON capital is less important than return OF the capital.
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