Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Markets: Where to from here? - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Nov 20, 2006

    Markets: Where to from here?

    Whenever, as equity analyst, we meet an individual (forget whether he is/was a friend), the first question we are faced with is what is your view on the market? Will it touch 14,000 this time around? Yes, it is our job to analyze market and let investors know what could happen based on analytical reasons. But is it possible that every time we should have view?

    Some times, it so happens that even the best in the industry 'just' do not have a view on the market! We know of many 'experts' who are totally surprised at the way the Indian stock markets have gained in the last three years and even astonished at the kind of bounce back in the last six months. It is better to say 'no view' as compared to saying 'the days of equity broking in India are over' in 2003 (this was by the head of a reputed domestic brokerage house).

    Some 'experts' are even smarter! Some 'market bites' that we have come across over a period of time are:

    1. The most common of them are 'We do not know where the index is heading in the near term, but the long-term prospects are good'. Forget the fact that the definition of long-term is ambiguous in the stock market circles. For some, it is one year and for a trader, it could be 'as much as' three months! It is up to the investor to understand what he means by long-term and if he/she is successful at that, may be, he will make money.

    2. "From here, markets can either go up or come down", said an expert in a business channel before one year or so. Truly commendable!

    3. Some talk of resistance and support levels based on historical charts that are anyways history! Forget the fact that the Indian markets are at unprecedented levels now.

    4. Some have even resorted to numerology and star signs (as was carried in few business/personal finance magazines) to predict stock market movements.

    5. Some are philosophical to conclude that 'markets are what they are - neither correct nor wrong - lets accept the way they are'. This is probably the response to the general view that 'markets are always right'.

    6. Some even cite the famous quote by John Maynard Keynes 'In the long term, all are dead'.

    Given this backdrop, in which category do we fall? As a regular Equitymaster visitor, one is very likely to have come across views like

    1. Equities, as one of the asset classes, are risky.

    2. Stock market is not a casino to conclude that 'if it strikes, it strikes big time'.

    3. Invest in fundamentally strong companies with a long-term view. Fundamentals i.e. business that have seen atleast one economic cycle, solid track record (outperformed the sector in an upturn and in a downturn), stable cash flows and more importantly, credible management at the helm.

    While there are enough statistical evidences to prove that the first two points are true, it does get tricky to identify businesses/companies that have such a track record. Even if they have the track record, it is not a guarantee that it will sustain or even if it sustains, how will a retail investor be able to identify such companies successfully. Here is where the golden rule of equity investing comes into play i.e. diversification. Do not put all your eggs in one basket (the term 'one basket' could be both over investing in very few stocks or only investing in equities).

    By investing and managing across a broader, but a nimble portfolio, which manufacturers/sells products that you can associate with (from soaps to sugar and not genetic engineering), one is more likely to minimize risks. And more importantly, when it comes to assessing one's portfolio performance, it does not matter what your friend made from his equity investment or how much you could have made by investing in 'that stock' instead of 'this stock'. At the end of the day, the portfolio should be geared to meet your financial needs. Period. If you are unable to dedicate time to generate such returns, it is time to consult a personal finance advisor whose objective is not just his commission, but also your needs.

    If one follows such basic discipline, it does not matter what the level of index sixth months down the line is going to be. And surely, it does not matter what our view on the stock market is now!



    Equitymaster requests your view! Post a comment on "Markets: Where to from here?". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 03:37 PM