Recession and Solution
Attribute of recession
Decline in GDP for 2 or more successive quarters of a year. Or
1.5% rise in unemployment in a year. Or
Declining trend of business cycle. Or
Downward trend in growth rate of GDP. Or
Significant decline in economic activities, such as employment, investments & corporate profits.
Causes of recession
Currency crisis
Energy crisis
War
Under consumption
Over production
Finance crisis
Effects of recession
Bankruptcies
Credit crunch
Deflation
Unemployment
Crash in property
Stock market crash
Spreading from one country to others.
Responding to recession
Deficit spending by Government.
Tax cut to boast demand
Business owner redesign customer offerings
Replace workers with more motivated staff
Over communicate .
reasonable man power, lower leverage cost, new techniques, rich and intelligent entrepreneurs initiate.
Rebuilding high confidence with in economy
.
Responding to recession
Initiating new infrastructure projects.
Lower profit margins to boast sales
Recruiting motivated pro-active staff.
Looking for alternate cost and material.
Using sun-earth-air-water based projects.
Reforms and updating agriculture, manufacturing, services and retail
.
Responding to recession
The founder and managing director of venture capital firm : Draper Fisher Jurvetson (DFJ), MR. Tim Draper says both boom and bust cycles offer opportunities. Hence current financial crisis is yet another opportunity for entrepreneurs to build great, disruptive businesses. This is the time , entrepreneurs, are recreating themselves, working out how to do with less money. Greater opportunities come from tops and bottoms…………….
Macro study : on march 2009
Inflation is very low, creating space for lower interest rates.
Capital, man-power, raw material, space is available at affordable rates.
Demand is also low. To create demand either lower margins or introduce better version of product with more value, or come out with alternate option.
Invest for longer period , in business , unit or enterprises. Cont………….
Cont………
This is 1st time in history that all the governments together globally, are trying their level best , not only to safe guard but infusing money , ideas , infrastructure , tax benefits and lot more to kill the devil of recession and collective efforts hardly fails.
If we think we can beat recession , we can.
Understanding business cycle
We simply attempt to be fearful when others are greedy and to be greedy when others are fearful. – warren buffet.
Value investing is solely concerned with getting the most profits at the lowest cost.
Broking business : what to do
Learn new technology, new tools to perform better in next bull ( upward ) run ( trend )
There is no substitute to education and experience. Spend money and time in education to upgrade our self.
When economy will start moving upward no one will have time to teach or learn.
Judgment by using technical
Volumes
Pivot
By using rsi
Moving averages
Candle stick
Cci
Fibonacci levels etc.
Technical as on…….
Moving averages (simple): as on 16.02.09
2877 2885 2853 2822 2870 2882 3769
Fibonacci price projections:
0% 61.8% 100% 161.8% 261.8%
Up 2662 2852 2970 3160 3468
Dn 2970 2780 2662 2472 2164
Using derivatives
Butterfly spread : safe trading strategy , have insurance while earning better profits compare to bank interest rates
Using call puts to hedge our positions
Calendar spread for benefiting out of discrepancy in rates between the 2.
Advantage of leverage in speculation.
Arbitrage
Its most of the time profitable trade.
Arbitrage” trading is simply the trading of securities when the opportunity exists during the trading day to take advantage of differences in value between the markets the trades are made within. Arbitrage trading takes place all day long on most days that the markets are active.
Arbitrage
Spot to spot
Spot to future
Future to future
Future to options
Options to options
Spot to options
Penetration of new clients
Tell success story of equity investing for long term, the way we invest in bank fd.
This is good time to go for SIPs in stocks, valuations are attractive compare to jan.08.
Ask clients to avoid leverage. 2nd invite only that money which is not required for immediate expenses.
Be honest and tell risk and reward. Patience is the name of the game.
Asking investors to invest at cheap rates ( attractive valuations ) is social work.
Time to work harder
This may not be time to expand but this is time to invest your efforts in big way. More you go out , more you will get.
Hard working personalities never fail.
All efforts reap bonuses , its matter of time , today of tomorrow , success is going to knock our doors. Stand up, starts moving