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Best Investment Strategy right now? | Market Macros with Akshat - YouTube
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hi everyone welcome to today's video so
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today's video is very interesting
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because i am going to disclose one of
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the best investment strategies that you
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can implement right now to make money in
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the stock market so what is that
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investment strategy
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it is that stop watching the news that's
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it that's what the investment strategy
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is but i will logically break down and i
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will bring in a lot of major
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macroeconomist to help you understand
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this point better so i'll keep this
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video short brief to the point and you
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will learn a lot through this video that
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how news is used to manipulate your
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buying decisions why you should be
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avoiding it and what are intern things
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that you should keep in mind to make
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decisions in the stock market so we will
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do a macro analysis of the economy right
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now by keeping these points in mind so
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first and foremost let us understand the
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most critical piece of news that has
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been going around that fis have sold
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like crazy in the indian stock market
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and they are forever going away and they
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will never come back into the economy
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ever ever ever again and therefore you
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should be really worried people on
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twitter have gone on on a twitter rant
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they have blissed us on their hand by
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tweeting so much regarding all this fi
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dii issue that has been going around in
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the market so what is the news the news
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is this that fiis have sold like crazy
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in the indian stock market but let us
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use some logic here and let us try to
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look at some numbers and do some
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rational analysis so if you take a look
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at the total sales or net purchases of
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fis you will see that in this current
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month fiis have roughly sold 38 000
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crore of asset so you need to first and
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foremost understand how big or small
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this number 38 000 crore is okay so we
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go to cdsl's website and we take a look
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at the total equity investment that fiis
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have made over the years so you can look
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at the entire data so we are taking a
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look at the equity segment we are not
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taking a look at the total so what will
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you observe that in 1998 total 29
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973 crore worth of assets were purchased
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by fis similarly if you scroll through
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all this data some years fis have been
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net sellers some year they have been net
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buyers so on and so forth and the total
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money that has been invested by fis is
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approximately 11 lakh crore so if you
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take this 38 000 crore and divide it by
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the total investment that fis have in
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the indian stock market what will be the
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ratio the ratio will roughly be three
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percent so fis have only sold three
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percent of their equity in the indian
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stock market rest ninety seven percent
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is still invested and we are only
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looking at the equity segment we are not
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looking at any other segment so ninety
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seven percent of fi money is still stuck
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in india only three percent has been
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sold and people have been creating panic
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news people have been creating panic
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that you know what everything is going
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to get destroyed this that now comes the
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second key question that okay great fis
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have sold three percent of the total
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equity they had in the indian stock
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market but where are they investing that
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equity there is no clear answer right
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now because even the u.s stock market is
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falling crypto market is falling the
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real estate market is falling so
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everything is falling so the most likely
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scenario is that fis have withdrawn this
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money but they are sitting on cash it's
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not as if that they are doing anything
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with it when the macroeconomics improves
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they will come back to the market they
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will start investing in the emerging
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economies and indian stock market is
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going to skyrocket from that particular
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perspective so that is the way in which
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you need to analyze news because if you
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start believing in all this random stuff
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that you know what fias have forever
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gone away this that and start believing
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in all this panic you will lose a lot of
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money in the stock market okay so now
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comes part two of the video as to why is
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it that the stock market is behaving in
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such a volatile fashion it is behaving
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in such a volatile fashion because feds
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the u.s feds have decided to change
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direction
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this is dr rajan explaining this same
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viewpoint so i will let you hear this
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clip then i will give some commentary
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around it you talked a lot about
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emerging markets
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what is the message for emerging markets
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is this priced in for them too that this
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is a fed that is serious this is a
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central bank that means to do whatever
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it takes apparently that's how i
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interpret it to make sure inflation
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stops rising and starts coming back
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towards that two percent target
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i i think that was the message that uh
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chairman paul was trying to convey that
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we will do whatever it takes he did
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however say this is a world with a lot
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of uncertainty
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and obviously when you look at the
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uncertainties around the world i mean
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there is of course the china issue how
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how strong will uh chinese growth be how
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much will the property sector matter how
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much will the chinese lockdowns matter
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going forward and of course there's the
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very big
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uh ussr sorry this uh russia ukraine
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issue uh will uh russia make a move will
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oil prices go through the roof will that
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tank growth i mean these are i think
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very big uncertainties and of course the
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viruses is still can't be uh sort of
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written off so i think he said we will
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be you know we will be taking that into
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account but on current trends we have a
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strong labor market we have reasonable
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growth
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and
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it's time for us to raise rates and
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don't
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you know don't believe that we will not
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work our hardest to bring on inflation
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under control and essentially set the
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grounds for stronger growth over the
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medium term all right so dr rajan has
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said three critical things on this clip
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one is that he has said that feds are
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changing direction now with every fed
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meeting every time the feds meet they
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are deciding to increase the interest
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rate now whenever the interest rates are
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increased in the bond market the money
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flows out of the stock market into the
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bond market now feds are doing and
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changing this direction quite
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aggressively why because the entire
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world is grappling through inflation
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right now including the u.s now the
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important question is that okay why is
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it now that these feds have started
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changing the direction why not last year
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because last year also inflation was
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there and why can't they wait for let's
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say one more year and then they start
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adjusting the interest rate why is it
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that feds have decided to take these
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measures right now this is a very
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important question to understand because
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if you understand this fundamental issue
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you can make a lot of money in the stock
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market in the next one year so this is
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what dr rajan touched upon that there
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are some major challenges in the economy
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right now no doubt about that that china
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is dealing through its own issue the
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covet problem has not been solved yet
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the russia ukraine problem is still
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going on but it's not as if that these
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challenges will not go away they will go
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away and the feds understand it right
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now the sense in the market is that
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there is this overall calm the demand is
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coming back the employment situation is
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improving and all the other macro
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indicators are telling us that hey the
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world is in decent shape right now
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now you would say that okay if world is
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in decent shape then why is it that the
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stock market is falling yes because now
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if everything looks calm then feds get
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the mandate to start handling the
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inflation issue think about it this way
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that till last year there was a lot of
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macroeconomic crisis that was happening
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in the market there was very less
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confidence people were really bothered
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how will this covet situation pan out
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and a bunch of other negative negative
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things but now the situation looks calm
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and therefore feds are getting ahead of
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this inflation related problem that is
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one second key thing is that up until
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now feds used to believe that inflation
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will be transitory in nature transitory
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inflation in simple word means that the
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inflation will just take care of itself
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in alignment with the growth of the
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world so feds need not intervene but the
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new data that is coming out in the u.s
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it clearly says that the inflation is
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close to seven percent which is like
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madness so therefore feds have to get
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ahead of the curve in order to solve
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this inflation problem by increasing the
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interest rate very aggressively and that
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is precisely the reason why stock
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markets are falling now this viewpoint
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has been collaborated by another major
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economist he's dr paul krugman he's a
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nobel prize winning economist and this
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is what he had to say regarding the fed
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tapering issue
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many now worrying that we'll see a
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policy mistake many felt that the
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federal reserve was moving too slow some
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are now worrying that
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intentionally we could see it move too
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fast slam on the brakes how are you
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anticipating this very tough balancing
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out that the fed has to get in terms of
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still not stifle growth but really look
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at these price increases head on and the
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wage inflation they're in
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yeah they're looking at it as fast you
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know as best i know and i'm not don't
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have a lot of inside information they're
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looking at it pretty much the same way
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the fed's version which is also my
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version is that it sure looks as if the
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economy has hit the speed limit
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um but it's that's a call for taking
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your foot off the gas pedal it's not a
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call for slamming on the brakes and so
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what they want to do then that's the
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balancing act how do they sort of you
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know get us to level off to to slow down
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a little bit without throwing us into
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into a recession um no guarantee that
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they'll do that but they're nobody is
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under any delusions here so he has used
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a very interesting phrase and the phrase
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goes something like this that the feds
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are taking foot off the paddle not
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slamming the brakes now what does this
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mean so let me help you decode this so
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this simply means that up until last
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year feds were printing a lot of money
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and they were taking monetary actions in
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the economy to stabilize the economy
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because since there was so much fear in
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the market that you know what everything
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is going to shirt all the companies are
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going to share this that so feds printed
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a lot of money distributed it people
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went ahead started investing in stock
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markets and bunch of different different
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things why was this done to generate
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confidence so feds up until last year
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were accelerating the paddle the feds
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were pushing the monetary policy in such
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a way that they were accelerating the
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entire economy now since the economy is
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back on track they have decided to take
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off their food of the paddle there will
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not be any more quantitative easing so
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to say or money printing so to say and
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feds are going to be hawkish in terms of
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monitoring the inflation that has been
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created due to their past actions so
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what does this second part mean the
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second part in simple word means that
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it's not as if that feds are going to
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increase this interest rate like crazy
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people no they are not going to do that
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they are just not going to accelerate
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the economy anymore and they are going
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to monitor the situation and let it play
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out that is simply what they are going
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to do its not as if they are going to go
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crazy and increase the interest rates
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this is the key fear that is driving the
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volatility in the stock market because
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everyone is very bothered that what feds
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might do feds according to dr krugman is
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not going to make such dramatic moves so
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now let's go back to dr rajan and let us
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understand the final part of the video
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what is the way ahead from a macro point
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of view and let us listen to what dr
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rajan has to say
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the markets aren't building in
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the normal sort of fed reaction to this
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kind of inflation
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and that could mean one of a number of
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things
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maybe growth falls off a cliff as the
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fed raises interest rates i doubt that
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but that's one possibility the other is
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financial markets fall and then the fed
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sort of has to back off because the
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wealth effects the loss of confidence
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all that
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essentially uh causes activity to slow
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at this point i don't think the fed sort
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of
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believes each of either of these two is
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a huge risk
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and wants to act appropriately but i
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think this is one of the reasons we are
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in a new world the fed is giving itself
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some room to react if necessary
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so dr rajan has given an excellent
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viewpoint he simply says that if the
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financial markets fall if financial
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market falls sustainably then feds will
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have to back off so why this situation
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has reached let us first quickly discuss
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that so essentially what is happening
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right now is that feds are very clear
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that you know what inflation situation
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is going to persist and we need to deal
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with it and we are increasing the
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interest rate every time this action is
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taken the stock market will fall but
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feds are also very careful that we can't
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overplay this situation it's not as if
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that we can go crazy and increase the
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interest rate so much that the entire
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stock market falls sustainably in such a
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situation there will be entire panic
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that will play out and investors might
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leave the stock market for a little
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while and that will be bad for the
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economy so feds are very very careful in
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terms of balancing this game increasing
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the interest rate and not letting the
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stock market fall too much this is a
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very important point please keep this in
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mind this is a trick that you must
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understand about the stock market if you
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combine all these different facts so far
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what is it that you can derive so what
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you can clearly understand is that we
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are moving towards a sideways market it
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is becoming clearer and clearer with
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time every time the world moves toward a
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slightly more peaceful resolution
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peaceful situation feds are going to
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increase the interest rate that will
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bring the stock market down but they
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will be very careful not to let a crash
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happen so again the stock market will
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not crash crash per se there will be
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minor corrections and this situation is
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likely to persist for some time so what
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is it that you and i as investors should
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do so number one we should not chase the
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stock market for example when the stock
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market is making new highs please be
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very mindful in terms of undertaking
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bulk purchases it might be a bad time to
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purchase because we are likely to see a
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lot of minor corrections in the stock
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market going forward so it would make a
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lot of sense to be patient and sensible
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in this stock market number one please
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don't act on news be rational in terms
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of your analysis don't get manipulated
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by news don't just sell all your stocks
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because fis are selling they are doing
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it for some very specific reasons so do
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that data analysis number two purchase
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stocks in small small amounts and
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usually purchase stocks when the stock
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market has fallen don't purchase bulk
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stocks when the stock market is rising
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because there might be numerous
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corrections ahead of us so i hope you
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enjoyed the video please give it a
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thumbs up and i will see you tomorrow
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you
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