Billions and Billions of dollars of Investor Wealth wiped out and there seems to be more pain in the offing. Markets have corrected (?) from a high of 21k to 10k levels and going by the intensity of the downward move, i think it can be safely assumed that we have not yet seen the Bottom.
Global Financial Crisis, has taken India along with it and in fact it had done more damage to Indian markets than it has done to the US markets. Warren Buffet once said ,If one did not have the capacity to see his stock beaten down into half without losing his composure, one must avoid the Stock Markets.
Speaking of Buffet's wealth itself has gone down by $10 Billion USD thanks to the recent crash/ correction. But he seems unperturbed, in fact he has gone on record saying that this is the time to "BUY", and he has actually bought into Goldman Sachs.
So what should we do here in India? Follow the God Of Investing? Well, predicting the bottom is not an easy task, but i would stick my neck out and say that the market has more downside left and we can consider buying after that.
What if u have not sold out of the market when the market hit a high of 21k? Well, as it stands nothin much can be done since u cannot sell out now. But maybe its time for u to analyze why u held on to them in the first place without selling them. Did u join the rally at the last stages? Did u feel tempted and hence held on to the stocks hoping for more upside? Or Did you fool urself by saying to urself that u were a long term Investor and held on to the stocks, while the reality was that you were greedy and held on to them for more profits.
Whatever mite be the reason, treat this as a lesson handed out. The lesson? " Dump your greed and your Stocks when the valuation overtakes the growth rate". Financial Markets have never been a place for the Weak hearted and it is only during times such as these that the truth is felt.
Stop feeling bad, get the learning and Happy Investing.
7 comments
Gower, it would be great if you can also post the linking facts between US market and ours. I still dont know why our market fell from 21k to 10k.
current happening...gud topic for write up...but i have a question here...the best company today may be the worst company tomorrow to invest...so at this point its nuthin to say except having "fingers crossed"..recently i got a forwarded mail...which says to investment in beer is better than investing in companies bcos you can get back some pennies back when u return the aluminium cans for recycling...
Rupkumar Ji, Valuations by itself is a vast topic, and i m no expert on it, Anyways will try my best to address ur doubt.
PE is a very simple parameter to begin with, Now if u were to go back and look at the PE of the stocks which were the darlings then u will find that the PE was higher than the growth rate.
Also, it was like there was no provision for a negative happenin. It was like nothin could go wrong. Power sector zipped n zoomed as it was said that we needed huge capacities to be built, while that part still holds true, what was conveniently forgotten was the execution risks, Government regulation ( Power is a highly reglated sector) and cost of raw materials involved and so on.
Real Estate story was another where the company's land banks were valued at exobitant rates. While India still needs Investment in Real Estate, the IT parks n malls are not the solution or the way forward.
Similarly i can go on about each sector,a lot of froth was built up thanks to cheap money which was available and now the froth is being whipped out and thank God some real gems are being hammered like anythin providing us great opportunities.
Regarding the link between US n Indian markets i have already written on it and it can be found here
http://gowerramesh.blogspot.com/2008/08/analysis.html
Right now the Sentiments are real bad, everyone seems to think that the world is going to come to an end tomoro and thts just contributing significantly to this fall.
Yeah Deepthi, Its all Gloom now or atleast thts what most of them are seeing, and yeah regarding Investment it always involves a bit or risk as it involves prediction just like many other things in life
I rhink the markets will bounce bck by Oct.2009.:)After a sudden growth,there'll be a recession and I think one must be patient to waut for the better times.Remember there were market crashes in 1992 and 2001 too and we bounced back reasonably!:)
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