I have been in Bangalore for the last 3 days. One of my best friends father passed away. D. K. Adikesavulu.
I know the usual refrain, but Bangalore has grown so much. In Whitefield itself there are 4-5 malls, there are so many people and it is crazy crowded.
The easy money in India is now gone and only the people with real business acumen can survive.
I look at Bangalore and see all the wealth that has been generated and
see that all my friends have made millions, but you know what, I am
still happy to live in USA. The traffic in Bangalore is horrendous. The place still has horrible infrastructure. The cost of living is so high, I can guarantee you that it is going to force businesses to look elsewhere to reduce costs. My personal feeling is that Bangalore has seen its heyday of growth and you will slowly start seeing consolidation and very slow growth or negative growth in Bangalore over the next 5 years.
On a global macro level with the fed about to stop buying the 85 billion in bonds that they have been buying and having to shed 3.8 trillion balance sheet of bonds in USA, you can expect a very high inflation rate in USA. This will cause an increase in costs for all IT companies in India and combined with the new H1B rules and the costs involved, there is no doubt that pain is ahead for corporate India, all this will take 1-2 years, but will filter into the Indian economy.
So my advice for people with cash:
1) In USA buy assets. Money is currently very cheap and you will never see rates this low, ever. BUY, BUY, BUY.
2) For India, I have no clue, but to me the asset prices all look way over valued. I would not be smart enough to say to people to sell assets, but at there inflated prices, I would sell a few assets and sit on the sideline with cash in hand.
The inflation in India seems to running at around 7-9 percent and combine that with deceleration in growth, I can see massive failures for development companies and others that have borrowed for growth. This is the time for consolidation and elimination of debt and accumulation of cash. There are going to be massive failures coming in India.
That is what I see, we will see how accurate I am in the next 4-5 years.
I will be following my own advice and buying lots of assets in USA and borrowing as much as I can at these low 3% mortgage rates.
