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Happy New Year to all

People in many many parts of India are celebrating their new year today. Puthandu in Tamil Nadu is celebrated on the first day of the Tamil month Chithirai, marking the start of the Tamil calendar. Many other regions also celebrate their new year today - Punjab, Bengal, Assam, Odisha & Kerala to a name a few. #Onenationmanycelebrations

The PM of India extended the lockdown for a further 19 days, taking the total nationwide lockdown to 40 days. With the cases and deaths increasing daily, the PM was at pains to indicate that India had fewer cases when compared to the US & some European countries and attributed this to the lockdown.


The economic loss during each day of lockdown is close to $ 5Bn in loss of income; by the end of the 40 days, we would have lost 10% of our GDP! This number is significant because naturally, the economic distress is felt especially by those at the bottom of the pyramid. Also, the deeper impact is of policy uncertainty stalling any decision which means the impact will be felt for longer than just the 40 days.


The hit to the economy is likely to be severe now that the quick end of a lockdown is ruled out. The World Bank says India’s GDP growth this fiscal year may be in the range of 1.5-2.8%. The Institute of International Finance has said that India’s GDP is likely to shrink by 0.3%. All depends now on what happens on May 4.


Yes, this analysis does not feature the human cost. There is a higher chance of flattening the curve with the lockdown and we will likely save more lives in the process. And so despite the grave economic consequences, the govt has made the decision for persisting with the lockdown.


So what does all this mean for investing?


Rather than repeat myself like a broken record, I want to share what ace investor Howard Marks, co-chairman for multi-billion dollar asset management firm Oaktree Capital told his investors. https://www.oaktreecapital.com/docs/default-source/memos/calibrating.pdf


I loved his closing statement...

“The bottom line for me is that I’m not at all troubled saying (a) markets may well be considerably lower sometime in the coming months and (b) we’re buying today when we find good value,” he wrote. “I don’t find these statements inconsistent.”


Wishing everyone a very happy and healthy "Puthandu". We are privileged to be spending time with our loved ones as many around the world are battling for their lives and livelihoods. This phase too shall pass and we will prevail and celebrate together soon.


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