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Friday, October 24, 2008
Markets
Asian markets opened lower and now trading mixed. The SGX Nifty is down 106 pts to its previous close. As per some technical analyst, the market may trade weaker and shorts have been created in the realty and metal sector. New longs are being taken in the capital goods sector. As we told earlier the support of 9830 breached and have come down and closed at 9771. Next support comes at 9500 levels. For a bull market correction it can extend to a maximum of 61% retrenchment, and for SENSEX @ 21000 it shows the bottom as 8270 levels. In case if the index touches this levels the PE Ratio of SENSEX will be around 10.33 which looks very much attractive. But looming uncertainty confuses all technical analysts and all market calls are going wrong. So be prepared for a tough period and patience pay reward in a long term perspective.
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Few days back my friend sent me an email saying I have not yet given my advice on buying stocks in this south bound journey of index as I am his advisor on the market. I sent the following reply to him and I would like to share the same with you all to read.
Buddy, you are very lucky that I have not advised you (lol) and you have not invested yet. I invested and told our friends to invest when index was around 12,000 to 13,000 points, thinking this could be near to the bottom, but what happened now was unexpected and those investments are in deep red now.
The people all around the world were in pain after hit by a tsunami called sub-prime issue. Even before giving a little time to breath, a new massive tsunami battered on the top of sub-prime tsunami, which is unpredicted and agonizing.
No one expected this kind of financial crisis to smack all around the world and all the stock markets would bleed like this. It is very unfortunate. We are witnessing some thing like this first time and let us take it as experience. It coincides well with our motto in Toastmasters International, as it says, "we all learn by doing".
Now, no one still have any clue of where the bottom is? At present, nothing else to do, it is really out of our hand. Let us just wait and watch until all the dust of the battle ground of bull and bear settles down, and then we can think of start investing for longer time.
Few things we learned……
1. Many of us had more than 100% profits in some of the stocks we were holding and thought we are holding it for longer time and hence we have not sold the same even when the market was at its peak. Now, those stocks are in deep red. This proves the saying "buy low and sell high" is correct. There is no point in holding the stocks for longer time. Profit booking is indispensable.
2. Never ever bring the money into the stock market, which are required in 2 or 3 years time.
3. If you are a passive investor, not doing any profit booking, then the long term means…. not 2 or 3 years, it will be more than 5 years.
Thanks buddy. K.L.Ravindran
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