Should I consider all these signs from the market as a warning - or should I be optimistic and consider it has a blessing in disguise and use it as an excuse for why I don't have a job ?? !!
My friends are worried about reading the newspapers - you know what we finance students fret about - a layoff even before we are employed - yes - it happens - TO US
I shall move on - the dots will connect !!! or I will make it connect :-)
Wednesday, 17 September 2008
Wednesday, 10 September 2008
Nuk-Clear ....
Decision to provide India with the Nuclear Deal seem to take forever. The news came as a pleasant surprise as most investors anticipated. The effect of this deal would be immediate in the stock markets and the outcome on the consumer market can be traced. This deal would act as the much needed stimulant that the Indian economy needed in a long time.
Prices of Oil should have seen a drastic effect. Oil share would do well, but then again one has to look at the producing company prices and the consuming companys prices.
All in all this is a good time again - and I am happy to be coming back home.
Prices of Oil should have seen a drastic effect. Oil share would do well, but then again one has to look at the producing company prices and the consuming companys prices.
All in all this is a good time again - and I am happy to be coming back home.
Friday, 29 August 2008
India's time to really shine !
3 Key news paper articles can have an impact on the way you invest :
The Economic time reported today and I quote :
"Indian stocks best performing among Asia in August: Citigroup
Indian stocks have emerged as the best performing lot among Asian equities, as it recorded only a marginal loss during the month, while a majority of others in the region posted higher negative return, a Citigroup report says. "
The Wall Street Journal reported :
"Europe's Growth Slowed in August
Economic growth in the 15 countries that use the euro slowed in August, according to a closely-watched survey, adding to evidence the euro-zone economy could slip into recession this year. "
The Financial Times reported:
"Pound suffers worst month since 1992
The pound has suffered its worst month against the dollar since October 1992, the month after sterling’s ejection from the European Exchange Rate Mechanism"
Now one can truely use the quote India Shining.
Friday the 29th of August saw Indian stock markets perform well based on the good inflation numbers and GDP expectations. Another market anamoly to remember.
After a week of low activities - investors were expecting a calm before the storm effect, but positive actions from around the world and strong global cues helped the Indian markets out perform global expectations.
Hasn't it always been the best time to work in India ? :-)
The Economic time reported today and I quote :
"Indian stocks best performing among Asia in August: Citigroup
Indian stocks have emerged as the best performing lot among Asian equities, as it recorded only a marginal loss during the month, while a majority of others in the region posted higher negative return, a Citigroup report says. "
The Wall Street Journal reported :
"Europe's Growth Slowed in August
Economic growth in the 15 countries that use the euro slowed in August, according to a closely-watched survey, adding to evidence the euro-zone economy could slip into recession this year. "
The Financial Times reported:
"Pound suffers worst month since 1992
The pound has suffered its worst month against the dollar since October 1992, the month after sterling’s ejection from the European Exchange Rate Mechanism"
Now one can truely use the quote India Shining.
Friday the 29th of August saw Indian stock markets perform well based on the good inflation numbers and GDP expectations. Another market anamoly to remember.
After a week of low activities - investors were expecting a calm before the storm effect, but positive actions from around the world and strong global cues helped the Indian markets out perform global expectations.
Hasn't it always been the best time to work in India ? :-)
Saturday, 23 August 2008
Market Anamolies ..!!
Before we begin discussing about the various anamolies that the stock market experiences, it would wise to define these financial jargons.
Efficiency as we all know can be divided in to 3 parts : the weak form efficiency, semi-strong form efficiency and the strong form efficiency. Weak form efficient market prices reflect all the past price information, the semi-strong form reflects all the public information available and the strong form reflects all the public and private information available.
Hence we can say that:
The strong form efficient market = Weak form efficient + Semi-strong form efficient Markets.
An Anamoly is the behaviour inconsistent with Models and/or Market Efficiency.
The Anamoly we would be discussing is the price behaviour which is inconsistent with the semi-strong form of markets.
Some of the well known anamolies are the small firm effect, the book-to-market ratio, the weekend and month effects, post earnings announcement drifts, short run momentum, market crash of 1987 and excess volatility.
These anamolies help explain the price behaviour in the stock market. Also recently we have seen effects such as the take-over news effect, merger and acquisitions announcement effects, and the most recent one of Anticipation Announcement Effect ( the announcement by a well know financial figure of what he/she expects from the market ).
In order to be a successful in the stock market, one has to be good with numbers and understand that at the end of the day its human psychology. Herding behaviour is consistent throughout. Unless you want to be a Trader, there is nothing much one has to know to make small consistent profits in the stock market. But be warned, its addictive.
Efficiency as we all know can be divided in to 3 parts : the weak form efficiency, semi-strong form efficiency and the strong form efficiency. Weak form efficient market prices reflect all the past price information, the semi-strong form reflects all the public information available and the strong form reflects all the public and private information available.
Hence we can say that:
The strong form efficient market = Weak form efficient + Semi-strong form efficient Markets.
An Anamoly is the behaviour inconsistent with Models and/or Market Efficiency.
The Anamoly we would be discussing is the price behaviour which is inconsistent with the semi-strong form of markets.
Some of the well known anamolies are the small firm effect, the book-to-market ratio, the weekend and month effects, post earnings announcement drifts, short run momentum, market crash of 1987 and excess volatility.
These anamolies help explain the price behaviour in the stock market. Also recently we have seen effects such as the take-over news effect, merger and acquisitions announcement effects, and the most recent one of Anticipation Announcement Effect ( the announcement by a well know financial figure of what he/she expects from the market ).
In order to be a successful in the stock market, one has to be good with numbers and understand that at the end of the day its human psychology. Herding behaviour is consistent throughout. Unless you want to be a Trader, there is nothing much one has to know to make small consistent profits in the stock market. But be warned, its addictive.
Saturday, 9 August 2008
RIde with the slide ---
Its been quite a while since my last post - infact its been months. During this period I have been doing some much required research work for my dissertation. The one thing I have learnt which seriously takes no MSc in Finance is that the market does not work on rules or mathematical formulae.
We have been taught various financial lingos like - correlation, in the money, options, derivatives etc. Although interpretting the various trends in the market is easier now, its not predictable at all. The fact is that only 27% of the financial market is run by taught professionals, the rest are self-taught and are people in other professions as well.
If that be the case, then why is it that we try so hard to understand how the market works ? Its one of those questions that cannot be answered. Like in medicine - my friend said they have been doing research for ages on how the brain works. There is no concrete answer, but a lot of new discoveries and the same happens with the financial market. Every study brings up a new problem and hence the quest for another solution.
"Mounting optimism that the US economy would outperform the rest of the developed world pushed the dollar to multi-month highs against leading currencies this week as the oil price resumed its downward path, providing support for equity markets." - This was the opening paragraph on the 8th of August 2008 for an article titled 'Overview: Dollar rallies while oil slides' in the Financial Times.
My research work lead me to the conculsion that there was a positive correlation between oil prices and the value of the US dollar since it was denominated in USD. But now I am confused.
Correct me if I am wrong but the article suggested that a gentleman's comments made the dollars price go up - OPTIMISM !!!!
Well honestly trying to understand the whole debacle has left me thirsty for some serious answers. Whilst I go refresh my brain with more knowledge to complete this article - please feel free to leave some comments and suggestions that might help.
We have been taught various financial lingos like - correlation, in the money, options, derivatives etc. Although interpretting the various trends in the market is easier now, its not predictable at all. The fact is that only 27% of the financial market is run by taught professionals, the rest are self-taught and are people in other professions as well.
If that be the case, then why is it that we try so hard to understand how the market works ? Its one of those questions that cannot be answered. Like in medicine - my friend said they have been doing research for ages on how the brain works. There is no concrete answer, but a lot of new discoveries and the same happens with the financial market. Every study brings up a new problem and hence the quest for another solution.
"Mounting optimism that the US economy would outperform the rest of the developed world pushed the dollar to multi-month highs against leading currencies this week as the oil price resumed its downward path, providing support for equity markets." - This was the opening paragraph on the 8th of August 2008 for an article titled 'Overview: Dollar rallies while oil slides' in the Financial Times.
My research work lead me to the conculsion that there was a positive correlation between oil prices and the value of the US dollar since it was denominated in USD. But now I am confused.
Correct me if I am wrong but the article suggested that a gentleman's comments made the dollars price go up - OPTIMISM !!!!
Well honestly trying to understand the whole debacle has left me thirsty for some serious answers. Whilst I go refresh my brain with more knowledge to complete this article - please feel free to leave some comments and suggestions that might help.
Saturday, 12 April 2008
Recession !!
MUMBAI: Retail investors are not the only ones who are scratching their heads, trying to figure out where the market is headed. Even the haloed bunch of analysts and experienced traders have been foxed regularly of late by the sharp market swings. The existing volatility in the market has resulted in several conventional indicators in equity derivatives turning ineffective, forcing them to trade on information on a daily basis.
Reading this felt so good that finally a newspaper agreed with what I thought was on as an amateur in the market. Where is the market headed these days ?
The bearish Indian markets have apparently pushed away the FII's but the Indian investors ( home bias effect ) and still sticking to their roots and taking positive calls even in a period of downturn.
LONDON: India has been identified as the most sought-after market in a major survey of 300 global retailers seeking to expand outside their domestic markets.
This is good to know considering the fact that I am "graduating into a recession" - yes the dreaded word has hit the major markets of the world.
Even the developed countries are not able to work against it, but the developing countries are doing unusually well. What can explain all this ?
Soaring oil prices - the underlying commodity of the stock market and the drive behind everything else in todays world is creating quite a few stirs. We must not forget that things started changing dramatically when this commodity was discovered, hence depletion of the same will also start changing things dramatically. The two way effect.
I guess it would be high time that we start understanding what is going to drive the market in the future.
Reading this felt so good that finally a newspaper agreed with what I thought was on as an amateur in the market. Where is the market headed these days ?
The bearish Indian markets have apparently pushed away the FII's but the Indian investors ( home bias effect ) and still sticking to their roots and taking positive calls even in a period of downturn.
LONDON: India has been identified as the most sought-after market in a major survey of 300 global retailers seeking to expand outside their domestic markets.
This is good to know considering the fact that I am "graduating into a recession" - yes the dreaded word has hit the major markets of the world.
Even the developed countries are not able to work against it, but the developing countries are doing unusually well. What can explain all this ?
Soaring oil prices - the underlying commodity of the stock market and the drive behind everything else in todays world is creating quite a few stirs. We must not forget that things started changing dramatically when this commodity was discovered, hence depletion of the same will also start changing things dramatically. The two way effect.
I guess it would be high time that we start understanding what is going to drive the market in the future.
Wednesday, 2 April 2008
FINANCE !!
Whilst studying in a business school students are asked to read several journal articles published by research students or established economist. One thing I have noticed reading several articles is that no one has the answers to this so called "market phenomenon". Just like we don't have answers to why some one would choose to do something that is not rational.
But this does not stop them from publishing more papers. My professor once said in class - finance is the only field of study where two people would win a nobel prize for saying completely opposite things.
Give me a break here, but no one knows the answers to why certain things behave the way they do. Newspapers publish reports on the market everyday, why can't they be blatent about it. They don't know the answers either. They beat around the same reasons time n again.
From my experiences so far, I feel if I had mixed human psychology with finance, I would definately be able to do better in the field of finance.
But this does not stop them from publishing more papers. My professor once said in class - finance is the only field of study where two people would win a nobel prize for saying completely opposite things.
Give me a break here, but no one knows the answers to why certain things behave the way they do. Newspapers publish reports on the market everyday, why can't they be blatent about it. They don't know the answers either. They beat around the same reasons time n again.
From my experiences so far, I feel if I had mixed human psychology with finance, I would definately be able to do better in the field of finance.
Tuesday, 1 April 2008
Equity Markets
As an amateur student I thought the higher I climb the better the view.
But studying Finance taught me that just like all other things in life, the view on the market has two different takers. As investors we tend to fear when the market rises because the further it rises, the fear of falling harder increases. Hence we adjust our positions to avoid such a hard fall.
(Although the view is better, one wrong step and the fall is harder.)
But then again we have the speculators who enjoy and feel safe at such great heights of the market. There are two kinds of investors from what I have understood. There are those who are planned and then there as those who are unplanned about their investment goals.
Investing in the share market is like driving a car my father once said. To master the roads, you would have to practice everyday. Then again you can only drive safely if you knew how to manage looking at the road ahead of you and at the rear view mirror.
Investing looking at the past performance or the history of the stock is like looking at the rear view mirror throughout the journey, you are bound to meet with a fatal accident. You base your expectations on the past and they are poor predictors of the future prices (as taught in corporate finance):)
The unusual behaviour of speculators:
- investors buy when the prices are low, but speculators buy when the prices are high.
Indirectly they are comfortable with high prices.
The restless behaviour of investors tends to prolong when the investments are not aligned and hence they speculate buying or selling at every turn of the market. This makes their life hard and their investments seem nerve wrecking. But those who have their portfolios managed and know what they are doing, are calm and composed.
Every experience is a teacher . What I have learnt from my experience so far is that nothing in life, even the stock markets falling is worth loosing your sleep over. You invest to make money, which is suppose to make life easier. But the outlook is different because people are having sleepless nights and tend to loose temper in places they are not supposed to.
Every investment has to be for a lifetime. Including education and equity markets. Hence when we have a long term goal in the markets, short period termoils should not bother us and its not worth it. Their are hurdles before the big win. These are just the small ones.
Have a great day !!
But studying Finance taught me that just like all other things in life, the view on the market has two different takers. As investors we tend to fear when the market rises because the further it rises, the fear of falling harder increases. Hence we adjust our positions to avoid such a hard fall.
(Although the view is better, one wrong step and the fall is harder.)
But then again we have the speculators who enjoy and feel safe at such great heights of the market. There are two kinds of investors from what I have understood. There are those who are planned and then there as those who are unplanned about their investment goals.
Investing in the share market is like driving a car my father once said. To master the roads, you would have to practice everyday. Then again you can only drive safely if you knew how to manage looking at the road ahead of you and at the rear view mirror.
Investing looking at the past performance or the history of the stock is like looking at the rear view mirror throughout the journey, you are bound to meet with a fatal accident. You base your expectations on the past and they are poor predictors of the future prices (as taught in corporate finance):)
The unusual behaviour of speculators:
- investors buy when the prices are low, but speculators buy when the prices are high.
Indirectly they are comfortable with high prices.
The restless behaviour of investors tends to prolong when the investments are not aligned and hence they speculate buying or selling at every turn of the market. This makes their life hard and their investments seem nerve wrecking. But those who have their portfolios managed and know what they are doing, are calm and composed.
Every experience is a teacher . What I have learnt from my experience so far is that nothing in life, even the stock markets falling is worth loosing your sleep over. You invest to make money, which is suppose to make life easier. But the outlook is different because people are having sleepless nights and tend to loose temper in places they are not supposed to.
Every investment has to be for a lifetime. Including education and equity markets. Hence when we have a long term goal in the markets, short period termoils should not bother us and its not worth it. Their are hurdles before the big win. These are just the small ones.
Have a great day !!
Monday, 17 March 2008
Monday...!!
Statistic says that most people suffer from a heart attack on a monday morning. Now it seems to make sense. I woke up this morning to my dad calling that the Indian market crashed. The root cause for all the mayhem was the Bear sterns emergency buyout by JPMorgan backed by the Federal Reserve at $2 a share. The subprime crisis had hit hard, the force was just realised. The move by JPMorgan seems sensible. Leaving an instituition crippled would have had adverse effects. The fed seems to have helped other instituitions by cutting the lending rates. All in all, US has been saved from a nightmare that investors would have faced if the fed hadn't reacted fast enough
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