Are you heading for the exit? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Are you heading for the exit?

Sep 18, 2008

..or so it seems seeing the way US, European and Asian markets are behaving these days. Take for example the US markets' yesterday's behaviour when the benchmark indices were down almost 4%. Or for that matter the way Asian markets have opened today, where losses range from 3% to 7%! Our own BSE-Sensex is almost 5% down. Reuters writes - "The seismic shift on Wall Street this week continued to create a sense of global panic, with frenetic consolidation in the financial sector in the world's largest economy, sending the MSCI all-country world stocks index to its lowest since November 2005."

There's panic everywhere!

And the panic seems for real. For it is based on things that are real...and stupid!

Stupidity and rashness from investment bankers, subprime borrowers, and central bankers is what is the root cause of the current crisis...and panic.

These people have made so many mistakes, that we can understand why investors would panic.

In several ways, the current distress seems worse than so many crises that the global financial system has seen in the past - like the 1987 crash in US stockmarkets and the 2000 dot-com bust.

These investment banks, who survived the earlier crises, must know the difference. What is more distressing is the fact that there is very little hope that the situation can turn for the better anytime soon.

  • Also read - Simple survival lessons

    So, are you heading for the exit?
    So, the best course of action for you, the long term investor, is to head for the exits. Right? Wrong!

    The current turmoil in the markets is a cautionary admonition for the culprits (like investment banks and hedge funds) and speculators to stay out of irrational behaviour.

    The unreasonable belief in the possibility of getting rich quick is the primary reason people burn their fingers in market crashes. One tends to neglect the fact that there is a direct correlation between high risk and high returns.

    While the history of market crashes does not in any way foretell anything dire for the future, the best thing that you as an investor can do is keep yourself educated, well informed and well practiced in making your moves.

    Your stocks can legitimately enjoy a huge leap in value over the long term, but expectations of this leap should be justified by the prospects of the underlying companies, and not just by a mass of investors following each other.

    Meanwhile, the panic continues...

  • Equitymaster requests your view! Post a comment on "Are you heading for the exit?". Click here!


    More Views on News

    IDFC Mutual Fund Starts Campaign 'SIFI'. Should Buy Into the Idea? (Outside View)

    Sep 23, 2020

    IDFC Mutual Fund is taking the road less travelled and hence started a campaign SIFI (SIP in Fixed Income) to promote the concept of SIP for its debt funds investors.

    My View on the IPO Market (Fast Profits Daily)

    Sep 23, 2020

    In this video, I'll share with you my thoughts on the recent spate of IPOs and what it means for the market.

    I Believe These Stocks Will Deliver the Most Outsized Returns in 2021 and Beyond (Profit Hunter)

    Sep 23, 2020

    Rules of the racetrack can help you bag the biggest gainers of the coming decade.

    An Important Hurricane Update for Energy Traders (Fast Profits Daily)

    Sep 22, 2020

    In this video, I'll show you how the extended hurricane season in the US will affect traders in crude oil and natural gas.

    Mutual Fund Investors Will Now Be Allotted Units Based on NAV of the Day AMCs Receive Funds (Outside View)

    Sep 22, 2020

    PersonalFN explains how SEBI's new circular on mutual funds impact investors.

    More Views on News

    Most Popular

    How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

    Sep 11, 2020

    This is how you can apply the greed and fear cycle in the market to pick stocks.

    Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

    Sep 17, 2020

    This leading household brand will profit big time in a post covid world.

    This Could Be the Best September for Auto Stocks (Profit Hunter)

    Sep 11, 2020

    Here's why I think this month could be a great for auto stocks.

    What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

    Sep 18, 2020

    Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...


    Covid-19 Proof
    Multibagger Stocks

    Covid19 Proof Multibaggers
    Get this special report, authored by Equitymaster's top analysts now!
    We will never sell or rent your email id.
    Please read our Terms


    Sep 23, 2020 (Close)