This is one of my favorite subject and one which I decided to stay away from in the year 2009. But, does not mean that I do not keep an eye on it. While there are some myth and realities about the market. There are few rules that I have made on my own:
- Never believe the media and the market experts shown on the TV – Either they don’t have a clue or deliberately keep some critical information with them
- You cant time a market but if you take a span of few years then there is a possibility – Example the market has fallen from around a level of 31000 to 26000 so there is a possibility of an upside of 20% plus and further more. But this cycle may happen in a few years
- When the sentiments of the retail is high that is the time to exit and enter when the sentiments are the lowest invest in the market
- Watch for fundamental reasons for growth.
So why i do see market still going down from the current levels:
- Each and every company is trying to reduce their cost through manpower restructuring and cost controls. Which indicates profit going up but does not indicate market is growing
- 2000 was an IT bubble, 2008 was a real estate bubble while this time there is no growth engine seen
- Technically the trend is downwards in the short and long term.
Has the market reached their lower levels I don’t will it go up from here also I don’t know. So what would I do if I had money parked with me is to start investing at these levels around 30% of my money and certainly with blue chip companies or fundamentally strong companies.
Ideally the market should have been around 25000 today but since it has touched higher levels it may also touch levels of 23000 and bounce back.
Finally one peculiar difference this time is that gold, crude and stocks all are on a declining trend. While these are my views market are risky and unpredictable so it may wise to safer the mutual fund way and leave equity to the experts.