Dear Mr. Berko: I lost $19,000 in the Chinese stock market because I didn’t see the bubble coming. I believe that our market has topped out, and I think the Indian stock market looks very attractive now that China’s economy has stalled. What can you tell me about the Indian stock market and India’s economy? What stocks would you recommend in India?
— L.L., Waterloo, Iowa
None.
Everybody likes the Indian market and the Indian economy. But when “everybody” hops on those ubiquitous Indian buses with all those cooking pots, goats and chickens, it’s time to disembark.
I’ve been to India frequently — traveling for weeks with a backpack and tent, by horse, by foot and by bus from Jammu and Kashmir to New Delhi and Hyderabad. During a dozen trips, I’ve learned a lot about the country, its 1.25 billion people, its merchant and privileged classes, and its government bureaucracy. And I don’t trust the privileged class, which thrives on its mutualistic, symbiotic financial relationship with a blatantly corrupt government. Regardless of the good economic numbers reported by New Delhi — e.g., 7.5 percent gross domestic product growth, a 3 percent increase in government revenues, 2 percent inflation and corporate profits gaining 16 percent — I’m mindful that New Delhi’s bureaucrats and politicians are genetically incapable of speaking the truth. From my catbird seat, it looks as if the Indian market and the Indian economy are topping out.
Mark Twain humorously divided the world into two kinds of people: those who have seen the Taj Mahal, which is terribly disappointing, and those who haven’t. A similar comment could be said of American investors; there are those who are familiar with Indian investment opportunities (they are few) and those who are not (whose numbers are legion).
