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.
Saturday, 12 April 2008
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 !!
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