Okay, first of all, I am not any certified financial advisor, nor do I hold any degree in the field of finance or investing. I am good at math, according to my teachers, but that does not mean anything – almost all Indians consider themselves to be good at math. Bottom-line; take this rant with a grain of salt. On a second thought, may be more like with a spoonful of salt. 
When it comes to economic growth since early 90s, the whole world is singing praises of India and China. Even the latest predictions estimate Indian GDP growth rate at more than 7%. That is more than double of what is expected in most of the western countries. So, things are not as bad as rest of the world, so it seems.
However, India has seen a tremendous growth in the last decade and beyond. Compared to only 6-7 years ago, the real-estate values have tripled or quadruped in many part of the country. The IT boom has been very significant, to say the least.
So, what is the problem? Exactly that – the long lasting boom. The upward growth has been so good for so long, that it is defying the laws of averages. Every good thing comes to an end, even though the end is hard to predict some times.
The world attention on Indian economy has not only brought in praises, but lots of investors, and lots of competition in all fields of industry. The upward slope of economic growth has certainly got worldwide attention. Everybody wants to invest in India now-a-days, but is it really the best time to jump in with both feet – with everything you got?
Probably not.
One may argue that it would be foolish not to invest in India, and you should join the party and get your piece of the pie – your share of the prosperity. That may be tempting, and it may be true, but no one has seen the future. And the common wisdom dictates that one should not throw in the money when everything is already appreciated beyond expectation. It would be equivalent of ‘buying high’ with a hope of selling higher. And, you never know when the high would peak, or if it has already peaked and the decline would follow.
And not to forget, by end of the day, India is still a developing country. It has its fair share of uncertainties and political issues. Compared to developed countries, it is a higher reward proposition, but at a higher risk.
Diversifying investment into India may be prudent; one should always consider diversifying assets globally – at least that is what the economic pundits say. But throwing everything into already red-hot Indian market may not be the best idea.
As they say – do not put all of your eggs in one basket; especially when everybody is throwing their eggs in the same ‘Indian basket’.
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#1 by po1990 at March 22nd, 2010
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good warning