We are borrowing this famous line to forewarn young population of North East of impending turmoil of world economy which may lash the Europe first and later other countries too within a period of a month to two years to come. We believe forewarning means forearming. Our advice to young people is not to indulge in speculation while planning investment strategy. They need to be bold but not speculative. They need not quit from invested money unless there is tearing need for cash. Yes, Share market may get crashed sooner or later. It may be going down and push up again immediately! But do not panic at all. If you are already in, do not redeem rather stay invested. However no new money should be put in except through SIP.

 Despite offering of stimulus package of one trillion Euro, Greece may not be able to survive the economic turmoil. It is now apparent that Portugal, Spain and Italy my also get effected badly. The fiscal condition of England is not too happy and new prime Minister of Great Britain has not only proposed salary cut for Ministers but also planning to reduce jobs in Governmental sectors. This may trigger sudden Impact on the fragile economy of Europe. The monetary system may collapse. What would be the condition of Euro currency and Pound Sterling.? Both the currencies are going to take a beating. Already Euro currency has come down considerably. It is expected to go down further unless all the countries of Europe start austerity measures.  “The European Economic and Monetary Union (EMU) and the euro are about to celebrate their 10th anniversary. The euro was introduced without serious problems and has since done well” said Martin Feldstein, George F. Baker Professor of Economics at Harvard University.  But now he felt that the current economic crisis may provide a severe test of the Euros ability to survive in more troubled times. While the crisis could strengthen the institutions provided by the EMU, it could also create multiple risks, of which member countries need to be aware if they want to avoid them.

“The Stability and Growth Pact, which limits euro-zone members' fiscal deficits, is another reason why a country might want to leave the EMU. In a serious downturn, a country may wish to pursue a traditional Keynesian policy through large-scale, deficit-financed fiscal stimulus”, the Harvard professor of Economics stated.   This may turn as boomerang on member countries economy.

  Many investors are also asking as to how  Indian economy would be also affected. Initially FII may withdraw money from Indian share market to support their own currencies. The export based industry of India is going to take a beating. IT majors who were aggressively pursuing business in Europe may suffer too. In near term Share market is going to go down but is expected to stablise in longer term. How the investors of northeast should behave to survive the turmoil?

According to our considered opinion the investors of Northeast should hold the money with them. Keep it in Bank or in liquid sector of Mutual fund. Even money can be parked in Government guarranteed bond or in Gilt fund for the time being. In these instruments investor may get 4% to 12% return over the year. They can start investing once market stablises at the lower end of the index. Now sensex is 17200 and Nifty is in 5100. Incase Europe take a spin our sensex and Nifty may reach 15,000 and 4800 point or can go down   much lower. At this point of time Senior citizen may stop investing in Mutual funds, Share market and in Equities. They can invest in Debt based fund especially in Government guaranteed debt funds where return would be improving in such a situation.

Global investors, who bought Indian shares worth $6 billion this year due to cheap funds in their home nations and prospects for growth here, are showing signs of taking some gains off the table following more than doubling of stock values. Foreign funds net sold Rs 381.42 crore of shares during last week, provisional data showed.

Global investors are panicking as experts such as former Federal Reserve chairman Paul Volcker and Deutsche Bank chief executive Josef Ackermann doubt the strength of financial markets in Europe. Let us not behave like an Ostrich, hiding the head in the sands.

Greece may not be able to repay its debt in full; Ackermann was quoted as saying by Bloomberg News. Volcker has said the euro may break up and Chinese Premier Wen Jiabo said the foundations for a worldwide recovery are not “solid” as the sovereign debt crisis deepens..   What could be done by Indian investors?

Investors flocked to gold, the traditional store of value, pushing it up to a new record of Rs 18,339 for 10 gm. The coincidence of the auspicious Akshaya Tritiya during last weekend, perhaps added to its strength.

Emerging market equity funds had a second straight week of redemptions, according to EPFR data. China equity funds posted their second straight week of outflows and Latin America equity funds saw outflows rise to the highest in 85 weeks.  Despite all these turmoil India is expected to survive better than most countries. It is not because Indian economy is very vibrant. It is because Indian mass can survive with bare minimum needs for a prolonged time. India’s 40% populations are below poverty level .These population can remain unaffected even when share market goes down to even below 12000 Sensex point. In 2008 when growth of Indian economy was under cloud none died of hunger and no revolution broke out like other Asian countries. It is because traditionally Indian knows how to survive a worst situation. This is because of the fact 80% population are dependent on agriculture. The failure of monsoon creates much bigger turmoil rather than   crash of Share Market… The biggest support system is internal market of the country.  The needs of timing millions are very meager. People get satisfied if one and half   meals are available. Market crash is inconsequential for them .So, how should Indian Middle class behave if recession strikes the society again?

Our suggestion is that no senior citizen should enter share market now. Young generation should hold money and get ready to invest when market stabilizes at lower end of the spectrum. Buying of Gold could be taken up on dip. All investment should be made now in Debt instruments and investment in equity should only start as the market goes down considerably. No investment should be made following the example of his  neigbours and friends who boasted of making money from equity investment last year, or listen to the advice of his  neighborhood brokers who have shown him the Golden Goose of equity investment. Patience and matured handling of wealth would survive the catastrophe, if struck.

          -------------------------------------------------------------------------------