Musings on Investing

The Grim Realities of India

Tax-loss Selling

Morgan Stanley recently came out with a report claiming that India would grow at the rate of 10% for the next 10 years. How did they reach this conclusion? In their view, higher tax-revenue from the recent indirect tax “reforms” and the abrupt demonetization of 86% the currency have given the Indian government improved capabilities to reach people’s pockets, which somehow forms the foundations for a bright future.

Also, Moody has improved India’s credit rating based on reasoning similar to that of Morgan Stanley’s. India’s rating has been upgraded from an abysmal Baa3 to a slightly less abysmal Baa2. This is plausible, at least for the short-term.

Not to be left behind, the World Bank has elevated India’s ease of doing business ranking from 130th to 100th in the world. This seems like a significant improvement but only until you realize that in this wretch poor country, with GDP per capita of US$1,718, the World Bank’s survey was based on interviews with formal businesses in Delhi and Mumbai, who have benefited from the destruction of the informal sector on which lives of virtually all of Indians depend.

While I am satisfied with Moody’s report, I give F grade to both Morgan Stanley and the World Bank. I am not sure if the people who wrote those reports have any experience of life in the real world.

I have written fifteen articles on the subject of tax “reforms” and demonetization for Acting Man over the last one year. Linked is the last article in that series.

On investments…

Following is my list of companies (in no particular order) that are likely facing tax-loss selling pressure. I also mention the price at which they interest me. If you like to buy, please be patient. There is no need to chase:

  • Nevsun Resources (NSU; US$2.12)
  • Amarillo Gold (AGC; C$0.235)
  • Thunderstruck Resources (AWE; C$0.05)
  • Avrupa Minerals (AVU; C$0.06)
  • Energold Drilling (EGD; C$0.30)
  • FPX Nickel (FPX; C$0.085)
  • Globex Mining (GMX; C$0.39)
  • Newcastle Gold (NCA; C$0.67)
  • Renaissance Gold (REN; C$0.205)
  • Alianza Gold (ANZ; $0.05)
  • Impact Silver (IPT; C$0.255)
  • Legend Gold (LGN; C$0.32)
  • Adventus Zinc (ADZN; C$0.85)
  • Irving Resources (IRV; C$0.66)
  • Treasury Metals (TML; C$0.51)

I am very excited that Mises India’s website has recently been inaugurated. Please subscribe to their newsletter here, and learn what makes poor countries poor. The founder, Dr Madhusudan Raj, has been for some time also running a three-month certification course in Austrian Economics. I visited them last year in Surat, a city in the western part of India, and was totally awed by what Dr Raj has achieved. A small amount of money goes a long way in India, so please contact Dr Raj directly if you would like to be involved. Also, he is always looking for good libertarian speakers to visit him.

Merry Christmas. And we wish you a very happy New Year.

Warm regards,

Jayant Bhandari

Associate: Rajni Bala


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