One for the novice

Expert advice on how to read the markets and invest smartly

- MADAN SABNAVIS

ANEESH DANGI IS an office-hold name when it comes to stock markets as his views on television are closely followed by dealers in their offices. It is quite appropriate that he has written a book on how to train one’s mind to be an investor in his book Booms, Busts and Market Cycles. As the title suggests, he takes readers through all these phases with clear guidance on how to read such situations and invest smartly.

He does give a lot of advice, but the one thing that will catch the reader’s attention is his analysis of returns on housing compared with equities. It is more of a revelation.

He simplifies some principles for the reader on how to choose portfolio managers. He gives tips like being wary of portfolio managers who have never struggled. Or to stay away from performance artists. Again, the chapter on interpreting markets is quite engaging as it also warns us on interpreting certain observations as a phenomenon. Often a crowded mall can make us conclude that consumption has revived and the stocks of such companies will do well. It does not work that way.

He prefers to use the first derivative of change rather than absolute inflation or GDP numbers. Dangi prefers PMI to IIP numbers to gauge the economic environment. Markets are better indicators than macro trends. Copper tells us what is happening in China. S&P tells us on risk appetite. The dollar reflects the global mood. Most importantly, and with a bit of irony, he warns investors to be wary of policymakers because they guide people to be calm when inflation is about to rise.