Stocks to buy and avoid - YouTube

Hi everyone. Welcome to today's video.

So take a look at this particular chart.

This is a very worrying sign.

The inflation in the US is at an alltime high in the last 45 years.

So that is what the data indicates.

And lot of people are now doing commentary in the US that because of this very high

inflation, the markets are going to crash by 90%. 90%!

And you will frequently see articles like these.

So in today's video, I'm going to discuss with you.

Number one, is the crash going to happen?

Number two, how the high inflation will

impact the markets, not just in the US but also in India.

Third, and finally, I will speak about certain types of buying

opportunities that you should be a little bit concerned about and certain

opportunities which you should look forward to because this might be a great

time in this high inflationary environment to purchase those type of stocks.

So let's get the discussion started.

I'll keep it brief to the point because it

is 01:00 AM at night and it is very cold and my hands are freezing.

So let's get the video started. First and foremost,

let us understand the Macroeconomics mechanics behind the high inflation.

So let's first and foremost understand that.

Is it because of high inflation that the US markets are correcting?

And the short answer is no,

it is not because of high inflation that the sto ck markets are correcting.

Stock markets in the US are correcting because of the fact that due to this high

inflation, what this has led to is that this has led FEDs or the US

government to increase the bond interest rates.

What does this mean?

Recently you might have read that Turkey went through a macroeconomic collapse.

What happened there was that the inflation was very high,

similar to how the inflation is very high in the US right now.

But Erdoğan, who is the President of Turkey,

he decided not to increase the interest rates, increase the bond interest rate.

So as a result, their economy collapsed

because Macroeconomics tells us that if the economy is going through a very high

inflation, then the government should step in and control that inflation.

And what is the way to control it?

It is that the Feds or the government will

step in and increase the bond interest rate.

So when the bond interest rates are

increased, the money flows from stock market to bond market.

This is a concept that I've taught earlier also, and I'm repeating that now.

You say actually you have taught this so many times.

Did the US government not know and why is the markets reacting to this?

Because of the fact that right now what

has happened is that the inflation has become so high in the US close to 7%.

This is very, very high for an evolved economy like the US.

So the expectation around inflation has been very high.

So therefore, the rate at which this interest will be hiked, will be high.

This is what the commentary is because there is likely to be a sudden spike

by the US government in terms of the interest rate.

Therefore, a lot of money will outflow from the stock market to bond market

and because of which the US markets are correcting.

Now, an obvious question here would be

that Akshat, with that logic, do you think that we will have like

a Dotcom type of a crash in the economy right now?

The answer is absolutely not.

I don't think that we will have DotCom like crash because this is expected.

This was expected. I myself have been saying for the last six

months on this channel that we have moved towards a high inflation environment

and now it has just started to show its results.

So nothing to be worried about from a crash point of view.

But there are certain stocks that you should be worried about.

So let's take a market view as to what

type of stocks might correct and where sector rotation of stocks might happen.

So, let's first and foremost listen

to Cathie Wood as to what she has to say regarding this entire situation in the US.

The rotation is still towards value.

It is hurting growth.

We think it's long in the tooth.

We think it's going to end, but it hasn't ended yet.

Where are the crazy valuations now?

Are they in our stocks now that Zoom is

down to 33 or 35 times this year's earnings?

Or is it in an auto stock where there might be losses?

And what's that PE ratio?

That's Infinity.

That's where the bubble is.

And I think you're going to see a lot more cases in point as this year moves along.

And the innovation that we see evolving so rapidly, DNA sequencing,

transforming health care, robotics, solving the labor shortage problem we're

having energy storage, the consumer preference towards electric,

artificial intelligence,

which is the glue that is helping all of these technologies converge.

And the last one blockchain technology.

We think that we're in a period of innovation.

That was the dream in the late 90s.

But those companies were vapourware.

They were based on nothing but eyeballs.

We have real revenues, we have incredible growth rates.

And if we're right and the economy has

an inventory problem, then our growth rates are going to look

far superior to anything you'd find in the value space.

And we are really looking forward to that.

So now, Cathy would speak about two different types of stocks.

One, she speaks about growth stocks and one she speaks about value stocks.

So growth stocks would be companies like

Tesla, Amazon tech based stocks like Shopify, Zoom etc.

These growth stocks have grown at a massive crazy rate post 2020 COVID crash.

Now, as a result, there was a bubble here.

And as the money moves away from the stock market to bond market now because FEDs are

increasing the interest rate, these stocks have started to correct a lot.

And they have been correcting for the last six months.

So if you take a look at Coinbase,

if you take a look at Zoom, if you take a look at UiPath,

all these stocks have corrected by a lot because of this specific scenario,

The second category of stock that Cathie Wood speak about are value stocks.

So value stocks are stocks which have a stable cash flow.

For example, this would be Walmart, Coca Cola, etc.

So these stocks are not showing a lot of correction in the US.

So this is what the current situation is.

But this high inflation data has come out

now and the whispers are that the FEDs are going to increase the interest rate

at a much faster rate going forward to control this inflation.

So how will this changed situation impact these growth stocks and value stocks starting now?

Past corrections have already happened.

So according to Cathie Wood,

she simply says that these growth stocks, they have already corrected a lot.

Even with this new information at play, a lot of air has been sucked out of these

growth stocks like Zoom, like Coinbase, etc.

So it's unlikely that these will correct further.

In fact, whatever correction remains to be seen because of this increased high

interest rate will now come from value stocks.

So let me just quickly draw this table and enforce this point.

So essentially situation now, absolutely.

Now what is going to happen is that these growth stocks have corrected heavily.

So no more correction is left.

And therefore, whatever correction is

going to happen will now start in the value stock domain.

So that is the entire commentary.

And I also align with this belief.

Now, the obvious question would be that hey Akshat, will this impact India?

Can you please comment on that?

The answer is yes, absolutely, yes.

It will impact India.

No doubt about that. Why is that?

Because think about it this way.

In 2008, when the financial crisis in the US hit, India also suffered a lot.

These stocks corrected in India by 60%.

When in 2016, the US got into a trade war

with China, it again impacted Indian stocks.

The bottom line is that whatever happens

in the US impacts India and other emerging economies.

So from that viewpoint, let us move on to the last section

of today's video where I will give a quick commentary to different types of stocks

which you could consider buying and you could consider selling.

So let's first talk about US tech stocks. Should you buy?

Should you sell?

The answer is, in my opinion, I am buying for the simple fact

that stocks like Shopify, stocks like Zoom, stocks like Coinbase,

they have all corrected a lot and now might be a great time to aggregate it.

So I'm putting my second installment in these types of stocks.

And also, if you check the data, not only these stocks have corrected,

there has been no business fundamental issues with these stocks.

Second, what about Indian tech companies?

Now, Indian tech companies are predominantly of two types.

One is TCS which is a service oriented company.

And second would be new age startups.

So my goal here would be simply to buy stocks that have corrected a lot.

For example if I consider like PayTM.

So PayTM has already corrected a lot so I

can start building some position in it in case I find value in that stock.

I'm not saying go and purchase it. This is a risky buy.

This is around speculation.

I've made a separate video on it. Please go and check.

It not a buying and selling recommendation.

All I'm simply saying is that compared

to PayTM and something like Nykaa, both are new age startups.

But if you check here Nykaa stock price,

it has not corrected at all despite having a very high PE.

So that deflation in Nykaa has not happened at all.

So I'm not going to purchase Nykaa as of now.

But I would analyze further and might take

some positions in something like PayTM because it has already corrected a lot.

So the chances of further correction

because of current macroeconomic situation is not that high.

Third type of stock is something like Alibaba.

Alibaba again has corrected quite a lot. Numbers have been great.

There is no issue whatsoever with Alibaba

and I'm building more position in something like Alibaba.

And I don't mean to stir up patriotic

sentiments, but it's given that China is going to surpass US in terms of trade

volumes in the coming few years, China, whether we like it or not,

it is going to become the strongest economy, especially with the situation

that is going on in the US, mostly around politics, the divisiveness,

and a bunch of other negative things that are happening in the US.

China will catch up to the US very, very quickly.

So here is a controversial statement that I will build more positions

in Chinese stocks going forward because I see China as a great hedge to US stocks.

So that is what I'm doing.

I'm just telling you honestly what I'm doing.

I'm explaining you my rationale.

You could start learning more about these systems in case you want.

I'll make specific videos on Chinese investing.

Also now comes fourth option, which is an Indian option.

That what about Indian beaten down stocks, especially around FMCG or manufacturing?

The answer is that this is a great time to aggregate, in my opinion.

So something like Dabur is a very good buy.

Something like NMDC is a very good buy.

So these stocks have already started

aggregating and I've given some commentary around these stocks in the last few weeks.

If you want, I'll make another video on FMCG.

But right now the FMCG is available at very attractive prices.

I don't think there will be more deflation

of FMCG stocks from where we are sitting right now.

Fifth and finally what about Indian

finance stocks because something like HDFC bank, ICICI they have all corrected.

Similarly, AMCs have corrected quite a lot.

Similarly, insurance has corrected quite a lot.

Honestly the finance sector in India,

especially around AMC and insurance, might become a massive wealth aggregator.

So from that perspective I have already

taken a lot of positions in these stocks and I will continue to do the same.

So in summary, these are the few key

points that you must remember from this video.

First and foremost inflation is very high

in the US and it is impacting the global markets.

No doubt about that.

It presents two types of opportunities.

One, please do not stay invested in stocks that are over inflated.

If you are holding positions in some of the stocks that are overinflated,

I'm not taking names because then some people get angry.

But why are you dissing on stocks that we have purchased?

So word is a day is Dissing.

So let me know what that means.

So I'm not giving out specific names but it should be fairly easy

and understandable that what stocks are over inflated right now you're smart

enough to understand that subsequently there are great buying opportunities both

in the US, India and even in the Chinese market.

So I'm taking positions across all three.

So I hope you enjoyed this short video and I will see you tomorrow.

Please don't forget to press the like button and subscribe to this channel.

Thank you so much and I will see you ether next time.

Bye.