Jan 2018 - MCAP - $2.3 trn GDP $2.6trn
Jan 2022 - MCAP - (est) $4.3 trn GDP $3.3trn
Difference : in 4 Years for a total addition of $700bn in GDP, we rewarded Equity investors an additional $2,000bn in Mcap. That's almost 3x.
1/n
Jan 2022 - MCAP - (est) $4.3 trn GDP $3.3trn
Difference : in 4 Years for a total addition of $700bn in GDP, we rewarded Equity investors an additional $2,000bn in Mcap. That's almost 3x.
1/n
Corp Profit to GDP stands at about 2.5-2.7% roughly. So that's about an incremental $20bn in additional profits added into the total mix. And we are roughly valuing this at 100x
Note that This assumes ALL incremental GDP comes from listed companies
Yeah Seems about normal.
2/n
Note that This assumes ALL incremental GDP comes from listed companies
Yeah Seems about normal.
2/n
Another statistic:
Incremental GDP addition this year:
USA - $ 1,250bn (5% on base of $21trn)
China - $ 750bn (5% on base of $15trn)
India - $ 270bn (9% on base of $3trn)
We make so much noise about the greatness of India's growth
3/n
Incremental GDP addition this year:
USA - $ 1,250bn (5% on base of $21trn)
China - $ 750bn (5% on base of $15trn)
India - $ 270bn (9% on base of $3trn)
We make so much noise about the greatness of India's growth
3/n
Fact is China + US still add incrementally to global GDP an amount which is equal to +60% of India's total GDP even today !
Oh did I forget to mention that California GDP = India?
But Mcap of Indian listed companies is reaching a whole new level.
4/n
Oh did I forget to mention that California GDP = India?
But Mcap of Indian listed companies is reaching a whole new level.
4/n
The most passionate reasoning these days is that there is "very little ownership" of stocks amongst Indian households unlike countries such as US.
But if you think tht 70mn demat + MF a/c's = stock ownership & that penetration is only 5% of total population, then ur wrong
5/n
But if you think tht 70mn demat + MF a/c's = stock ownership & that penetration is only 5% of total population, then ur wrong
5/n
Why's that ? Well because:
35% of India's population is BPL. Forget demat, stocks, financial assets, they don't know where their next meal is coming from.
Another 35% are those who are basically running hard to stay in one place.
6/n
35% of India's population is BPL. Forget demat, stocks, financial assets, they don't know where their next meal is coming from.
Another 35% are those who are basically running hard to stay in one place.
6/n
Another 20% don't even earn or are beyond risk taking ability (below age or above 65)
That leaves us with 10% addessible population who can basically invest in Equities.
That's roughly 14cr people. & We r already at 50% penetration !
This is where you are at.
7/n
That leaves us with 10% addessible population who can basically invest in Equities.
That's roughly 14cr people. & We r already at 50% penetration !
This is where you are at.
7/n
With 7cr people buying stocks thinking 15% CAGR from whenever they enter the market till the time they retire 25-30 years out is their birth right, what you have is avg valuations of better managed Indian Cos, growing at 10-15% CAGR r now trading at +40-50x earnings!
8/n
8/n
Valuations of companies from traditionally wealth destroying sectors have now suddenly increased 50-100% in the last 3-6 months, that too with no ostensible change in operating environment. So how much of the future prospects are we in a hurry to price in today itself?
9/n
9/n
Last but not the least, if compounding is the 8th wonder of the world, mean reversion is the 9th wonder.
If u go up too fast too, far away from long term Avg, sooner or later u will come back.
Today's returns are simply being borrowed from tomorrow's returns.
~END~
If u go up too fast too, far away from long term Avg, sooner or later u will come back.
Today's returns are simply being borrowed from tomorrow's returns.
~END~
• • •
Missing some Tweet in this thread? You can try to
force a refresh
