Mr. markets seems to be defying all levels and is in a really bad mood. Seems like he is unhappy in the way people had treated him in the past and taken him for granted of moving in only one direction. He has yet again proved to all of us that he moves by his own whims and cares for noone and just when everyone is expecting him to make the much anticipated move he would turn up with a big surprise.
Now, he has been in a really very bad mood and upset with the condition of oil and subprime. But, give the reaction people slowly have again started aligning themselves with him and predicting that the markets would move down in the near term. These days its an easy task to find reports of the lower and lower targets for Sensex (i have heard of 10,800 and 11,400 and many more). So,despite being hurt by Mr. Market's mood swings and his utter disappointment on the expectations of the oracles of the market (since mr. market damaged the oracles reputation). But, oracles are invincible and are back with newer predictions. The new predictions are more biased towards the downside, since mr. markets doest show a sign of happiness at the moment. Some of the oracles had been propagators since the time mr. market was in a good mood and predicting his mood to go sour since the past several years. But, these guys became visible only when Mr. market actually disappointed everyone and these talented guys (or may be lucky) were given the status of god, who could actually read mr. markets pulse.
But, my feeling at the moment is that mr. market might again surprise everyone (upside more probably or may be downside also but less probable). But, given the mood swings of market one thing is sure he is in a mood to surprise any and everyone who tries to predict his move. Surely, many people have been hurt in this whole humdrum and the tantrums of mr. market, but alas we were also enjoying at his behest, so we needn't complain since he keeps our lives exciting for sure (both ways).
Saturday, July 5, 2008
Friday, June 20, 2008
Markets and the reactions people give
With the markets reaching ever low these days, you tend to get the most reactions out of people these days.
But, i think this has been the market crash which has been quite painful for the traders ofcourse...The reasons that make me say that this is the wort crash ever are
1) F&O were quite easily available for trade even to most poorest of the traders (used particularly for a person in the market for a short term)
2) With the markets giving spectacular returns for the past 2 years, its more than easy to forget that "what goes up must also come down"
3) Overconfidence of people was at heights
4) Before the big meltdown in May, there have been many corrections followed by superb rallies. Many people who had participated in buying on these correction started to believe themselves as invincible (not difficult to do so when you double your portfolio in a month). And, those who had missed on these participated during the big crash in a big way (trying to make it up for the lost opportunities earlier)
5) Wide participation of the retail investors in the markets
The pain is much bigger for the smaller investors as they were leveraged more than they could ever think of (just on the assurance of the broker that markets would never move down sharply and obviously seeing the neighbour getting richer day by day riding on leverage).
In the earlier crashes the pain had been widespread with retail participation again at a peak. But, then leverage was available to a select few (who could afford the same - i will not use understand, as thats a very difficult thing to do).
All this i came to remember when i met a colleague in the lift, who looked tense but still had the courage to maintain a wary smile on his face while mentioning to me "aaj market dekha, 500 point down hai, 14,500 pahunch gaya". The days flashed bfore me, when even i also had dabbled in the derivatives to get my hands on burning experience (but ofcourse the tution fees proved to be quite hefty for a meager like me). I hadn't learnt from the saying "You dont need to touch an iron to find that it burns you", but ofcourse the iron tempted me.
Some of the reactions that i had got from people at the dizzying heights when sensex was 21K are
1) "Abe Reliance aaj 2% gira hai, mast buying opportunity hai"
2) A friend mentioned "Aaj maine ABZ liya". On asking the reason he said "Aaj woh down hai naa" and i was stupid enough to ask again "so...". Then, came the reply "S@@le @#$%%, kabhi ABZ bhi girta hai kya". I best i managed was a smile in order to hide my ignorance of the markets
3) I had a shock when i heard one of the guards of my earlier company asking the other one "Aaj market kaa kya hua ?". And the other one very calmly answered "Aaj to upar tha..."
Tips have been the swing during the boom. All the stocks were zooming and breaching new highs everyday. But, then nobody cared, as you can see the wealth was being created at that time, so nobody bothered to care till the end result was good. Valuation can be justified for any level of price and better still price justifies the valuation of the company rather than the other way round. It works on the theory of "All the investors cant be wrong, the stock is rising so there must be something good" (many buy in the hope that they dont know something which other people know, but still why miss the bus, when its easy to hop in)
I have seen people give 5 tips in a day and then as one of them turns out to be a big one (outperforming the market and beating most stocks on streer), they would keep pestering you with the idea they had told you in the beginning. And, you feel helpless as you hadnt acted on the idea, and missed the opportunity to be a millionaire...!
But, i think this has been the market crash which has been quite painful for the traders ofcourse...The reasons that make me say that this is the wort crash ever are
1) F&O were quite easily available for trade even to most poorest of the traders (used particularly for a person in the market for a short term)
2) With the markets giving spectacular returns for the past 2 years, its more than easy to forget that "what goes up must also come down"
3) Overconfidence of people was at heights
4) Before the big meltdown in May, there have been many corrections followed by superb rallies. Many people who had participated in buying on these correction started to believe themselves as invincible (not difficult to do so when you double your portfolio in a month). And, those who had missed on these participated during the big crash in a big way (trying to make it up for the lost opportunities earlier)
5) Wide participation of the retail investors in the markets
The pain is much bigger for the smaller investors as they were leveraged more than they could ever think of (just on the assurance of the broker that markets would never move down sharply and obviously seeing the neighbour getting richer day by day riding on leverage).
In the earlier crashes the pain had been widespread with retail participation again at a peak. But, then leverage was available to a select few (who could afford the same - i will not use understand, as thats a very difficult thing to do).
All this i came to remember when i met a colleague in the lift, who looked tense but still had the courage to maintain a wary smile on his face while mentioning to me "aaj market dekha, 500 point down hai, 14,500 pahunch gaya". The days flashed bfore me, when even i also had dabbled in the derivatives to get my hands on burning experience (but ofcourse the tution fees proved to be quite hefty for a meager like me). I hadn't learnt from the saying "You dont need to touch an iron to find that it burns you", but ofcourse the iron tempted me.
Some of the reactions that i had got from people at the dizzying heights when sensex was 21K are
1) "Abe Reliance aaj 2% gira hai, mast buying opportunity hai"
2) A friend mentioned "Aaj maine ABZ liya". On asking the reason he said "Aaj woh down hai naa" and i was stupid enough to ask again "so...". Then, came the reply "S@@le @#$%%, kabhi ABZ bhi girta hai kya". I best i managed was a smile in order to hide my ignorance of the markets
3) I had a shock when i heard one of the guards of my earlier company asking the other one "Aaj market kaa kya hua ?". And the other one very calmly answered "Aaj to upar tha..."
Tips have been the swing during the boom. All the stocks were zooming and breaching new highs everyday. But, then nobody cared, as you can see the wealth was being created at that time, so nobody bothered to care till the end result was good. Valuation can be justified for any level of price and better still price justifies the valuation of the company rather than the other way round. It works on the theory of "All the investors cant be wrong, the stock is rising so there must be something good" (many buy in the hope that they dont know something which other people know, but still why miss the bus, when its easy to hop in)
I have seen people give 5 tips in a day and then as one of them turns out to be a big one (outperforming the market and beating most stocks on streer), they would keep pestering you with the idea they had told you in the beginning. And, you feel helpless as you hadnt acted on the idea, and missed the opportunity to be a millionaire...!
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