By Nikunj DalmiaThe best time to invest is when you have cash. We have 10% in money and we are putting it to work, states that the Partner in Mobius Capital Partners. What’s economic activity in Europe? As an audience as an investor what is the very first spin on that?Of program, economic activity is down and I would say it’s probably about half what it might normally be. By way of instance, I was in Portugal. I was in Lisbon and in Algarve and the resorts were roughly 50% to 70% full. Of course, Portugal is affected since the tourist demand is coming down, but I would say that’s the general tendency. I was in Venice as well. There, things have been somewhat slower, roughly 50% of what they normally are. However there are a number of individuals which are travelling to those nations. Thus, it’s not as poor as a comprehensive shutdown, let us put it like that. Last time once we talked, you’re cautiously bullish. But I am certain that the market rally, and the comeback in all asset classes especially equities at large must have surprised you.Not because we knew that this avalanche of cash that was being printed by central banks across the world was going to have an effect. That’s the reason why I have been so bullish on gold and I have been generally bullish on shares since cash keeps on pouring into the markets and it must go someplace. A whole lot of people are at home gambling the niches. Companies like Robinhood in the US have had a huge following which pushes a good deal of these stocks up fairly radically. Some of the online type shares, some of the concept shares are going up like crazy without any earnings as a sign of this circumstance. When you take a look at the type of frenzy we have observed in a stock such as Tesla or the fact that Apple’s market cap at $2 trillion is more than the combined GDP of half the world, don’t you get concerned? Yes I get anxious as valuations have gone out of the window. I mean price earnings ratio does not mean anything . Of course this was a situation for some time now and which is the reason why the emphasis these days has been on return on equity, return on capital employed, margins that sort of thing but when it gets to price earnings or some of those other traditional valuations, it’s out of the window. With Tesla, it’s pure speculation over anything else and it’s quite amazing once you consider doing it. Of course, now some of those stocks are split and that adds extra volatility together with the smaller share price. More and more people will get involved along with a self-feeding type of a frenzy is occurring. In early May you stated you’re deploying capital and putting cash to operate. From May till now, have you used the money you have been sitting or are you now booking profits?No we are using the money. We’re searching for new opportunities, new bargains. We’ve had more money come into the money and we aren’t likely to rush in and just buy anything really almost. We’re extremely attentive. Generally speaking, we’ve got about 10% in money and we are putting it to work. The intriguing thing about our own portfolio is that India has become the largest and lots of this is not just because of buying but more significantly the Indian marketplace has also performed so well that the stocks we’ve got in India have done tremendously well.Did I hear you say that in your portfolio that the cash which you handled for your clients, your vulnerability to India is the largest in terms of a country certain allocation?Yes it’s, and that incidentally really surprised me as well since in case you recall I believe last time we talked India was third after China, Brazil and it was India. Currently India is first which speaks well for India along with the enormous functionality we have had.You had three shares or investments from India, have you made it have you created it five?It is still three but their costs have moved up very well and so we are still in that position.So which are the three stocks you own I shall take my chances of that?I do not want to discuss individual stocks since I am scared that the people will believe that they should be buying them. I prefer not to but you can visit the web and check Bloomberg what will be the Indian stocks we all hold on to. Let me say this they are focussed in the infrastructure area and also in the medical area. We’re extremely interested in medical sector. So those are the two regions which are extremely vital for us.A whole lot of parallels are being drawn which the present marketplace exactly what we have in US tech shares or the FAANG stocks would be now quite similar to what we found in 1999-2000. What is your view?Definitely, should you look at Tesla and a few of those other concept stocks, there is no question we are in this way and in that kind of environment, perhaps even more so because back in 2000, we had the dotcom boom. The sum of money available from the marketplace wasn’t as good as what we’ve got now. So there’s no question that in most cases we are in that type of an environment but there are different investors such as those that are more comfortable. We’re more careful about buying these types of concept shares or other stocks without earnings. You have a two-tier market now where we have the speculators moving after Tesla and shares such as that. The others are somewhat more judicious investors and look at earnings and more term trajectory for all these companies. If you feel there’s froth on the market and that shares such as Tesla are only running because of liquidity rather than because of real fundamentals, should you approach the marketplace with some warning? Is it time to raise 10-15% money on your portfolio?I would say that the lesson that we have heard through the years is that the best time to invest is when you have cash. We mean you truly need to be fully invested as possible, if it’s possible to get the bargains that you are searching for and never be concerned about getting a whole lot of money. As I said, we have about 10% in money mainly because we are extremely careful about what we are buying and also because of the cash coming into the funds. I would say it’s probably bad advice to tell people you raise money and do a little market time because we know that market timing does not operate within the long run. But what you should do is buying stocks that have good profits, good volatility, a large return on capital employed, those are the types of stocks that you should be focussing on and undoubtedly most importantly stocks which have good corporate governance. And you’re able to buy these stocks regardless of what the nature of the sector is. The marketplace can be popping up, it could be coming and that does not make any difference and within the very long run, you should do nicely. So given the amazing amount of money that’s sloshing around in those markets, it’s probably not a good idea to stay away but to purchase those decent stocks and ride up them since there will be money coming into those fundamentally sound stocks. Do you believe there’s some level of complacency which has got built in purely because of the recent setup in financial markets? There’s no question there’s a lot of complacency, especially when shares are being purchased willy-nilly regardless of dividends or regardless of earnings. So yes, I might say there’s some level of complacency and since a great deal of individuals expect this cash printing to proceed on and on, finally it will stop and when this happens then people are going to have to run for cover. But as I said, if you are sitting on audio stocks you still ought to do quite well despite what is happening with the cash printing as we go forward.
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