The Sensex will touch one million by 2050

Vivek Kaul 

So, the bosses are really mad at us,” said Harshad, the senior most analyst at the brokerage firm.
“Oh, why?” asked Ketan. “What did we do now? I have recommended every stock that they wanted me to recommend.”
I guess it must have to do with all the Sensex forecasts. There was even one report which predicted that the index will touch one lakh points by 2020,” explained Rakesh.
“Yeah and we haven’t put out one,” said Harshad.
“You know I don’t like these Indian numbers,” said Samir, butting in on the video-conference from Singapore. “This
lakh-shak is too small. Let’s talk of at least a million.”
“Samir,” said Ketan. “How come you are not on TV today, driving up the market?”
“Guys, lets get serious,” said a rather worried Harshad. “We need to do something.”
Arre this prediction business is too risky,” said Rakesh. “I predicted in 2007 that the Sensex will touch 50,000 points in six-seven years.”
“So?” asked Samir.
“Well, we are only half way there.”
“You forgot the first law of forecasting, which it to make as many forecasts as possible and then publicise the ones you get right. How do you think I have managed to survive so long?” explained Samir.
“Guys, we are deviating from the point,” said Harshad. “We need to do some damage control.”
“Like what?” asked Ketan.
“Like coming up with our own Sensex forecast,” answered Harshad.
“Then, let’s follow the second rule of forecasting,” said Samir.
“Second rule?” asked Rakesh.
“Oh. Let’s say that the Sensex will touch one million points by 2050.”
“But what is the second rule of forecasting?” asked a frustrated Harshad.
“Oh, it is to make a forecast very far into the future, so that even if we get it wrong, nobody would know that we had made the forecast in the first place,” explained Samir with a chuckle.
“Actually, the Sensex needs to give a return of just 10.8% per year for it to touch one million points by 2050,” said Ketan, quickly running the numbers on the excel sheet. “So this is one forecast we will most likely get right.”
Nah, but 2050 is too far off,” said Harshad. “While we can say that, we will also need something which is a tad nearer.”
“How about the Sensex touching one lakh points by 2022,” said Rakesh, not having learnt from his previous mistake.
“But why 2022?” asked Ketan. “And not 2021 or 2023?”
“Oh, in 2022, we complete 75 years of freedom,” replied Rakesh.
“So?” asked Samir.
“Mr Bachchan also turns 80 that year,” said Ketan.
“Guys, where is this heading,” said Harshad. “You will get me fired. I still have EMIs to pay.”
“Actually Mr Bachchan reminds me of a line from the film
Amar, Akbar, Anthony,” said Ketan.
Ye kya ho raha hai?” asked Harshad, having lost control of the meeting totally.
“So, y
ou see, the whole country of the system is juxtaposition by the haemoglobin in the atmosphere because you are a sophisticated rhetorician intoxicated by the exuberance of your own verbosity,” said Ketan.
“Man, I never knew you could say that,” said Samir, jumping from his seat. “I tried
rattoing it for almost a year and then gave up.”
“Guys, guys, but what is the point?” asked a beleaguered Harshad.
“The point is that we need to come up with some sophisticated sounding gibberish to predict that Sensex will touch one lakh points by 2022,” explained Rakesh.
“Ah you read my mind so well,” complemented Ketan.
“So, what is the story?” asked Harshad.
“It’s simple. The Sensex needs to give a return of 17.8 to 20.3% returns per year if it needs to touch one lakh points in 2022,” explained Ketan, quickly using the excel sheet again.
“And?” asked Samir, totally flummoxed about where this was going.
“If we look at Sensex since 1979, it has given a return of a little over 17% per year on an average,” said Ketan.
“But 17% is not enough. We need more than that,” said Harshad, feeling a tad relaxed now.
“Well, we can add a few percentage points, as the new government premium,” said Ketan.
“New government premium?” asked Samir, feeling totally left out in Singapore.
“You need to comeback Samir,” said Rakesh. “You are not getting even the most basic stuff these days.”
“Let me explain,” said Ketan. “Basically we will say that the new government will set right everything that is wrong with the Indian economy. And that will mean that the Sensex will rise at 20% per year over the next eight years, instead of the usual 17%.”
“Brilliant story guys,” exclaimed Samir.
“So, I guess we have our story,” said Rakesh. “Let me just go and check how my value picks are doing. I had bought some of these stocks in the late 1980s.”
“Wait, wait, guys. Let me add the icing on the cake,” interrupted Samir.
“But make it quick,” said Harshad.
“I think along with the story, we also need to launch a new M.O.D.I. fund,” said Samir.
“Eh, what is that?” asked Ketan, irritated by the fact that Samir was butting in to take all the credit. “Oh M.O.D.I. fund stands for
Multiple Opportunities in the Development of India fund,” said Samir.
“The name will help us raise a lot of money.”
“Ah, Samir, the I love way you give it a spin,” said Harshad. “Its all about Modi anyway.”

The article originally appeared on www.FirstBiz.com on June 16, 2014

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek) 

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About vivekkaul
Vivek Kaul is a writer who has worked at senior positions with the Daily News and Analysis(DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System , the latest book in the trilogy has just been published. The first two books in the trilogy were published in November 2013 and July 2014 respectively. Both the books were bestsellers on Amazon.com and Amazon.in. Currently he works as an economic commentator and writes regular columns for www.firstpost.com. He is also the India editor of The Daily Reckoning newsletter published by www.equitymaster.com. His writing has appeared across various other publications in India. These include The Times of India, Business Standard,Business Today, Business World, The Hindu, The Hindu Business Line, Indian Management, The Asian Age, Deccan Chronicle, Forbes India, Mutual Fund Insight, The Free Press Journal, Quartz.com, DailyO.in, Business World, Huffington Post and Wealth Insight. In the past he has also been a regular columnist for www.rediff.com. He has lectured at IIM Bangalore, IIM Indore, TA PAI Institute of Management and the Alliance University (Bangalore). He has also taught a course titled Indian Economy to the PGPMX batch of IIM Indore. His areas of interest are the intersection between politics and economics, the international financial crisis, personal finance, marketing and branding, and anything to do with cinema and music. He can be reached at vivek.kaul@gmail.com

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