SIGNS!!

A lot depends on how you look at the SIGNS!!
A lot depends upon able to identify the short term changes from long term trends.
Since a past few months have have been getting to see these indications.

Observing some patterns:
I read a couple of articles in newspapers and news-websties,

-> India lowers growth targets of 11th Five Year Plan (2007-12) in march 2010 from 9% to 8%


->The European Union crisis in May 2010


->Chinese stocks falling since June 2010


-> Yuan Slides Most in Seven Weeks August 2010


->The US unemployment rates remain high at 9.5 percent , now for more than a year - August 2010


->India’s industrial output grew by a lower-than-expected 7.1 per cent in Q2 2010. - August 2010


-> "the pace of economic recovery is likely to be more modest in the near term than had been anticipated" - Fed warning - this August
The US Fed  holds on at near-zero intrest rates, and is left with little options.

Simply to put it the indications of CEOs resigning is also not good.

GM CEO - Ed Whitacre , steps down on cusp of IPO filing.

Ranbaxy Q2 net dips 48%, CEO Atul Sobti to step down

I have not put HP's CEO ( Mark Hurd )resignation or call for BP's CEO(Tony Hayward) resignation,
in picture as these are short term,little or no impact items on the larger picture of the world economy

When I connect the pieces of the jigsaw puzzle, I believe

WAS IT PREPLANNED?
Was the June 2010 G-20 summit in Toronto a way that richer countries huddles together to make a consensus as to when, in which quarter to declare a recession? Remember that interest rates to keep the economy liquid were revised soon after the vist. I believe the Finance Minister and the Prime Minister knew that more liquidity would mean more washing away of money from the government coffers.

Q3 is going downwards and Q4 we'll see a global recession!

Now unlike seeing this like a premonition lets see it in a technical way.

Yesterday 12 Aug 2010, All global markets closed in Red.
However Indian markets opened and closed at the same or nearly the same level
Infact of the two major indexes, one rose a bit and one fell a bit.
SENSEX 18073.90 +3.71‎ (0.02%‎) 
NIFTY    5416.45    -4.15 (-0.07%)

This is a Doji Signal (Candle stick formation)

An unprecedented number of companies in India with capital posting huge profits to jack up the costs, after which a slump will be seen.
With sensex at 18073 with its way higher than it should be.

Remember the indications of a worldwide recession were coming from August 2007,
where as the sensex closed at its highest in Jan 2008 at 21078 ?

The poor investor is going to lose trillions of Dollars,Pounds,Euros,Rupees.

In fact I don't understand the concept of  P/E ratios greater than 12.5

Should not the price of a share not be equal to the potential dividend it can earn?
See for me the formula is fairly simple, the average growth is around 8% then

Price or share(take it as 100) /earning per share (as per organic growth 8%) = 12.5

Growth is no magic and a higher P/E means that the price is bloated,they are selling you a dream....
The more widely shares are held, the higher is the risk to the individual who hold the share when the bubble bursts and the price of share normalized.

What I could have done??
well....I have gradually switched from equity stocks to Gold and Gold related stocks.
Carefully watch how I spend every penny in my pocket.

But the big ticket things pending in my life
MBA
Marriage
should I plan to delay ? or let it take its own course??
I guess...I will go ahead with the former, no matter what, the latter can wait for later!!
After-all even our Finance minster P. Chidambaram is an MBA from Harvard Business School.