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November 2016

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Quest for Multibaggers?

Change is the biggest creator of Alpha, the spending patterns, business models going forward are expected to change drastically and if you can catch the right boat, wealth will be created.

Its been a volatile last 2 weeks, portfolio’s have taken a knock as local investors are nervous about demonetization whereas FII’s about the Emerging Market story.

Markets have very short memory and to be honest predicting the market is for fools. The worlds largest hedge fund said a day before election results that if trump were to win, the Dow Jones would fall by 2,000 Points, and you know what has happened to Dow Jones after that Click Here to read the Forecast.

I have at least 1000 traders and Investors on my phonebook and haven’t seen one who predicts the market all the time creating wealth.  Majority of investors who create wealth have a consistent strategy and we at Stallion Asset religiously follow that.

So where will be the next wealth creation?

1)Shift from Unorganized to Organized

2)Government Spending

3)Export Based companies

1)  The Unorganized Industry’s business model thrived because of “TAX KI CHOORI”, we strongly believe going forward the unorganized business will shift rapidly to the organized player.

2) Government is the only large spender after demonetization and you can expect government contractors to do really well going forward. There is large expected investments in this budget in Power, Roads and Irrigation.

3) With Strong US Economy and strong dollar, exports based companies are likely to do really well. Exports have been falling since last 18 months, there is a strong likelihood of reversals in Exports going forward.

Conclusion – “Every Crisis creates an opportunity”. Believe me you need few great ideas for your financial freedom. We at Stallion Asset have a consistent strategy that has worked well for decades. If Markets are to fall, they will fall before december 2016 i.e. the sale is on for the next 35 days. We don’t know where the next 500 point Nifty move will be but we surely know where the next 8000 point movement will be.

Today is Voting in the US, the media has like always been successful in creating a lot of hype around the election. As soon as elections are over, the media will focus on FED Meeting in December and then probably UP elections. You can’t be buying and Selling based on these media hypes.

I am not denying that there was no Risk in these events, the problem is there are very few in this World who can predict these events and even fewer who can do it consistently. To make money you need Luck, to create wealth you need consistency.

We at Stallion Asset have taken the easier way, we look at companies which can double their Profits in 2-3 years i.e. growing at 25-35% and have high return of capital employed. We only Invest in 3 sectors in any given cycle, WE CATCH THE TREND AND MANAGE OUR RISK.

So the Question is How will US Elections impact Sensex  and your Portfolio?Lets see what are the scenarios that are possible

1)Hillary Wins, Market Rises 1-2% and sustains there

2)Hillary Wins, Market Rises 1-2% but doesn’t sustain (Inverse Brexit)

3)Trump Wins, Market Falls 3-4% and sustains there

4)Trump Wins, Market Falls 3-4% and starts a new Mini-Bull Market

We don’t know which scenario will play out but can expect an average volatility of 2% on election result day.

Lets see how US Election results have affected Sensex in last 36 years. The markets have done well regardless of the president.

us-elections-vs-sensex

The Markets have historically performed Better when the republicans have been in Power. (Donald Trump is Republican whereas Hillary Clinton is from the Democrat)

democrat-vs-republican

Conclusion – “Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves” -Peter Lynch. Don’t fall prey to media hype, have a consistent strategy of Wealth Creation. Every 6 months there is a new worry in the market, as much fun it is talking about it, wealth creation is a boring job and need patience.

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