investment mantras..!

Equities are back and with it comes the thrill and accompanied pressure of producing above average returns. Business pundits have come up with lots of advice about new investment avenues. Most of them are pure common sense and some of them can be easily deciphered if we use little of our grey cells. However, a systematic approach based on pure fundamental analysis can easily produce returns of the the order of 30 to 50 % in 2010. Lets look at some of them.

The solution to the last years's financial crisis has created excess liquidity in the system. Most of them will be absorbed in the commodities. We can already see such signs in the prices of gold and crude oil. Secondly, as the world economy recovers and especially Chinese demand for raw materials to power its throttling growth rate, we can safely assume commodities will easily produce handsome returns in the next year. So , it won't be foolish to invest in steel and other metals.However, gold appears to be overvalued and its time to book profits . The world financial system is not going to break down and thus this rush to gold is pure panic driven without driven by strong fundamentals. Finally, infrastructure stocks like power and real estate will do well for quite sometime. However, we need to be cautious as real estate assets often get caught in vicious cycles of counter productive bubbles which result in irrational pricing . Similarly, all this hype around power sector needs to be closely examined before we land up into another type of dot-com bust.