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Sunday, December 30, 2007

'The "NIGHTMARE" that you saw last night' in the stock markets

'The "NIGHTMARE" that you saw last night'.Members please read it line by line and do revert back if u have witnessed something else.


There are some universal principles which are timeless.But we tend to forget them on good times.Take the last 2 years for instance,the stock market has been moving only north and all the available heuristic in such situation was only positive.Only some days back ,we heard people predicting market at 25000 levels.

Then what explains the drastic erosion in stock prices now?The economy is still forceast to grow over 8%.Corporate results are also good.The reason is simple.The sentiment has changed.Why?Fii"s are selling and so are the common simple gullible investors in panic.But is it not common that anyone who buys will some day sell?This was a predictable surprise.Were you not warned that getting into little researched penny stocks was very dangerous?You also were aware of the dangers but you wanted to ride the wave thinking that you will exit at the first sign of the weakness.But,then everyone was thinking the same.When the time came to sell,everyone wanted to sell,but alas there were no buyers.Why did you get trapped?It was because of your greed.You wanted a 10 bagger;you wanted to make a first buck.Now you go and blame the penny stock companies for your woes.But one needs to remember that someone smarter than you exploited your greed and thus you are holding worthless stocks.Had you not been greedy using common sense to understand that there are no shortcuts in life,you would not be nursing your wounds today.We all commit mistakes but the important thing is to learn from it and not to repeat it again.

Now we come to this crucial question of why is the stock market so unpredictable?Why is there so much of volatility?Why are stocks going down inspite of decent results?What has really happened to wipe out crorer of rupees worth of market capitalization?Why the stocks recommended by analysts and fund managers are also going down?The reason is very simple.We believe that the market is efficient and people make rational decisions to maximize profits and this is what we have been taught time and again.The fact is that market is not efficient or else how could stock prices of companies fall inspite of good results?Or how could stock prices of penny stocks rise inspite of companies having no business or below average performance.

It is important that you learn to control your emotions when you are an investor in the stock markets.At present the stock market is gripped by fear and investors are paying for the excesses commited during the greed phase.

My members must be assuming something has gone wrong with "Arun" and thatswhy he has written shits for us.What the hell he is talking about,we are in a great bull market and it can only go "up":isnt it folks?lolz(laughing out loudly).........well guys i have tried something different here.Everytime the market moves up and whenever it nosedives great people so called self proclaimed renowned analysts would come sharp 10 a.m at tv's mentioning they all had predicted correction would come and so it finally happened.In the meantime common people has already got stucked in companies which only exists in paper and now there is "No way out" for them.So did you get it people what am deemly hinting at?

Now the nightmare is over people,be happy,chill,its your day and stocks are performing big time.But do keep in mind what "arun" said for you and do make needed necessities so that 'the nightmare doesnt present you pangs of hauntimg memories".The markets have had a steep climb very rapidly.You should remember "For every action there is an opposite reaction".Hence we will have always have to prepared for a steep correction.The excesses will have to be corrected as they were against universal principles.But the silver lining is that such times will also offer great investment opportunities.Still the equities as an investment class,are most tax efficient.I am sure there are exciting times ahead.Wishing you all a very happy and prosperous new year.



Regards,
ARUN
9432577255
I can be reached at:-arunanalyst@rediffmail.com

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