Seeking Alpha by Adding Beta

Finally GM saga is reaching its climax. It's sad to see such as American icon going BK just after it has celebrated 100 years. On June 1, 2009, GM would file for BK and become "Government Motors" since US Government would own nearly 70% stake in the company. This used to be case when capitalists used to criticize Indian Government or Chinese Government owning large public enterprises. I am not in favor of government owning any companies but sometimes they do have to in case market forces don't function properly as we had seen in case of financial crisis. So what's next for GM ? IMO, it would get restructured and emerge as much smaller company so that it can survive and prosper. Say bye-bye to big SUVs like Hummer and welcome to green cars like Volt. However they don't have much time - if they don't fix it soon, it may come back to similar state in 10-20 years. Markets are at cross-roads with and trying to establish a base around 8500 and looking for direc...

Finally month-long Indian elections are over. The results were quite surprising and in a way positive for country. I was little dis-appointed with BJP's loss and Advani's last chance to become PM. I really wanted him to become PM and lead India for next 4-5 years. But alas - that was not to happen. However good thing was that congress won decisively and hence does not have to depend on whims of smaller parties like SP, BSP , Lalu and so on. Now Dr. Manmohan Singh can form strong government and pursue economic and foreign policies which he could not in first term. On these two topics, BJP and Congress are both aligned and can really make a difference at least in first three years before election season starts. Here is what I think India could (and should) in next 5 years. GDP to grow by 50% in 5 years taking it to $1.5 Trillion 100 to 200 Million new jobs IIT and IIM  in every state 5 international level companies with revenues of $50 Billion each Telecom penetration of...

Finally stress tests on 19 biggest banks in USA is over and what a gift it was. When they were announced, everybody discounted the merits of these tests and stocks of banks which were going thru these tests got killed as if they were going to get nationalized come May. Many folks panicked and sold their holdings in these banks. Even smart money stayed on sidelines. Now that results of these tests are announced and banks supposedly need about $75B to raise This is peanuts for these 9 banks considering what they are getting in return. Confidence: To stay in business, banks need this most fundamental attribute which was non- existent during last few months. In one master stroke, Obama, Geithner and Bernanke created confidence in banks and hence Bank of America which needs to raise over $34 got a boost by 60% in its stock price in one week. Fortunately, I spotted the trend correctly early in the cycle. Check out my post on 3/22 http://smaniyar.blogspot.com/2009/03/are-financials-ready...

My basic guiding principle of recent picks (and personal investments) have been: Survival - is company going to survive this economic hurricane ? Appreciation - if it survives, how much appreciation would company stock have (that means, has it come down enough to trade like option on survival) Dividends - would company resume paying dividends after threat of survival is gone Examples of these strategy are DDR , PLD , ACAS , XL, PDS , BCS and many more. Fortunately the strategy has been playing out very well during this market upswing. Would it continue to play out as good as it did in future ? I still remember dot.com bust of 2001 and 2002. There are many companies in technology sector which appreciated multi-fold once they were past "survival" test. Examples: Sonus networks, Redback , Redhat , Rediff India (was trading at below 10 cents at one point), Yahoo, Ebay and so on. Learning from that experience, I decided to apply this strategy on financial, insurarance and rea...