Fes­ti­vals sans fes­tiv­i­ties

Money Times - - Bazar.com -

Mul­ti­ple head­winds pose mul­ti­ple chal­lenges to the stock mar­ket. Dussehra is just at an arm’s length away but muhu­rat pur­chases of con­sumer durables are still lag­ging. The pre-fes­tive Di­wali cheer is con­spic­u­ous by its ab­sence while the on­line dis­count sales have hit a record high. This may be a flash in the pan and does not in­di­cate the fes­tive cheer. At Dalal Street, the do­mes­tic and global head­winds have raised a ter­ri­ble storm. Hardly had the dust set­tled on the liq­uid­ity and sol­vency is­sues of NBFCs, the US mar­kets nose­dived around 800 points in Dow Jones mid-week prompt­ing Pres­i­dent Don­ald Trump to state ‘Fed has gone crazy’!

Tor­rid times are in for sure and the prophets of Doom are work­ing over­time to raise the stress level of in­vestors and dam­age their health and wealth. It is not that such times are any­thing new. The ebb is a nat­u­ral com­ple­ment of the high tide and it’s no dif­fer­ent this time. The rea­sons for the low tide dif­fer each time but it ful­fills one main pur­pose – to cor­rect the ex­cesses that had set in. Sea­soned in­vestors and wealth cre­ators will vouch for the fact that such phases are not sui­ci­dal if your stakes are mean­ing­ful and pru­dent. Ob­vi­ously such ex­ces­sive swings at ‘jwar-bhaata’ (high and low tides) are pure out­comes of over­lever­aged sit­u­a­tions.

If viewed ob­jec­tively, the mar­ket pun­dits who scream of doom and gloom to­day are the same prophets that flaunted In­dia as the econ­omy of the fu­ture. High­est GDP growth amongst large economies, youngest pop­u­la­tion, huge work­force, ris­ing pur­chas­ing power, fast de­vel­op­ing in­fras­truc­ture, etc. Have all these fac­tors changed overnight? Are cor­po­rate prof­its squeezed? Can a coun­try that is strid­ing ahead eco­nom­i­cally sud­denly turn tur­tle and be­come ir­rel­e­vant in the world? Ob­vi­ously not, such pun­dits in all like­li­hood are the ones who have no clue about the mar­ket’s fu­ture. They al­ter­nate be­tween eu­pho­ria and de­spair and earn fat bonuses out of it. Just ig­nore them as they are equally ig­no­rant about the mar­ket trend like mil­lions of other in­vestors! In­vestors need to ne­go­ti­ate such try­ing times once again with the con­fi­dence of the fu­ture. They earn and lose high P/E mul­ti­ples on ac­count of volatil­ity. Stay put with volatil­ity and let it not in­flu­ence you neg­a­tively. After all, we all know that the mar­kets make new highs and cor­rect only to scale higher al­ti­tudes. In­vestors should be in this game with zeal and en­thu­si­asm and not lose sleep over booms and dooms. Tim­ing the mar­ket is nearly im­pos­si­ble. So, we must stand res­o­lute to temp­ta­tions of buy­ing when the P/E mul­ti­ple ex­pands eu­phor­i­cally. Sim­i­larly, we must not sell when the sen­ti­ment turns neg­a­tive. From a high of 6200 in Jan­uary 2008, the Nifty col­lapsed to 2600 in just a few months only to touch 6100 again in Oc­to­ber 2010. Don’t let the macro head­winds (do­mes­tic as well as global) de­rail your in­vest­ment ve­hi­cle. Just like ev­ery good thing comes to an end, the worst too does not last eter­nally. Gov­ern­ments and in­dus­tri­al­ists of­ten pre­pare to in­su­late them­selves from such chilly head­winds. It is just a mat­ter of time. Till then, en­joy the ‘me too’ move­ment all over the me­dia. This will at least save you from the un­wanted stress un­less it turns to ‘you too’!

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