Stockmarkets: Count of death?

1, 2, 3, 4.....13, 14, and 15! No, these are not the number of scams unearthed in Indian politics in the past eight months (there might be many more!). Instead, these are the number of weeks in the recent past when the Indian equity markets have risen incessantly. In terms of months, while the gains have not been consistent since he markets went on a northbound trajectory since the mid of 2003, the tone has been overly bullish. And the movement has been rather fast.While many factors seem to have changed in the field of equity investing over the years, two factors that remain the same, and would continue to cling to sentiment on the stock markets are greed and fear. These factors have played crook on investments made by small investors in the past and, we fear, the way Indian markets are moving up, greed and fear may cause heartbreaks once more.

Wait! We are not here to spoil the party (or the hangover!) that is making rounds in the Indian equity markets, we are only reiterating our cautious stance. We completely concur with the long-term growth story of the Indian economy and on the fact the India has finally 'appeared' on the global scale. However, our concern relates to the fact that we (in the equity markets) seem to be moving rather too fast. And thus, the chances to trip are high.

Consider the facts, apart from the companies that have a long-history of being listed on the bourses, even those that are just appearing on the public scene and about whose fundamentals investors have no (or less) clues, are gaining substantially in this period of intense optimism. While some call it the 'IPO boom' and some call it 'the emergence of a new India Inc.,' we would like to caution investors from investing in these new kids on the block without having ideas about their performances in the past. To take a leaf from Benjamin Graham's thoughts, the abbreviation 'IPO' does not only stand for 'initial public offering.' More properly, and especially at these times, this might mean either of the following:

• It's Probably Overpriced

• Imaginary Profits Only

• Insiders' Private Opportunity, or

• Idiotic, Preposterous, and Outrageous

Finally, while the greed factor is much responsible for this merry-making on the bourses, even a small hint of fear taking over can end up in a contagion, hurting the sentiment of those for who believe that there is no stopping markets from going up, and up, and higher up! And that would be unfortunate for small investors who would have invested their hard-earned money as guided by the 'ever-optimist' forecasts.