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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Ask India About Inflation

Economics / Inflation Nov 22, 2009 - 09:40 PM GMT

By: Andrew_Abraham

Economics

Let’s put things into perspective India has one of the largest populations in the world as well it is one of the strongest markets this year. The economy is booming. There are new constructions starts, corporate earnings have been going through the roof as well as the Rupee has gained in value against the US dollar. Sounds great… Right?


That is the good news, the bad news is that food prices are on the rise and for the first time in decades India has to import rice to feed its population. Do you remember the rice shortages last year? Rice is a staple for much of the world and now there are shortages. The reality is we are seeing gold move up in price as well as shortages in basic food stuffs. Are these the latent threat of inflation? If or when inflation lifts its ugly head the influence will be felt in virtually all aspects of life.

This will negatively affect the Indian economy as well as the man on the street. As well interest rates are expected to risk Also worrisome is the fact that the Indian Stock Market now trades at 21 times the consensus estimate of earnings, the highest valuation among Asian markets after Taiwan, The Indian central govt is not sleeping however. Several weeks ago the Indian govt bought a large amount of gold.

Is it possible that the Indians are one step ahead of the rest of the world? Do they realize inflation might be coming and they are taking steps to protect their economy and their people? As much as there are articles and posts like this, I am sure there are equally as many speaking about deflation. I have read numerous pieces on Japan discussing deflation and it’s effects on their economy.

The good news is that with trend following with commodities we do not have to know the future. Either way if there is a trend commodity trading advisors stand the chance to make a profit. The point however if there will be truly be inflation, this is a wealth destroyer and one of the ways to protect ones net worth is via trend following. If prices trend up, a commodity trading advisor just follows the upward trend. This potentially could protect your net worth.

No one knows the future… but trend following a basket of commodities should be a percentage of everyone’s portfolio.

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading ddvisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Sean Rushforth
23 Nov 09, 09:40
Gold
Gold prices have today hit a record high Trading Spreads

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