Skip to main content

Market is very aggressive and buoyant - Written on 25th April 2012

As per my analysis & study there are four kinds of expectations in the Stock market. Those are as under.

Unexpected Un -expectation: We saw this situation in 2nd half of 2011 where negativity was at high. All bad news were at forefront. And people were expecting everything unexpected to happen in the matter of inflation, Interest rate, IIP data, Forex problems and Euro zone. Sentiment was so worse that people thought there were no tomorrow.

Expected Un- expectation: This is the scenario we are going through now. Where we know all the above problems still exist but they are known and will subside in due course. Though things have not improved and we know they are there but those things are in price as well. They do not expect any great things to happen soon.

Expected expectation: When these problems will really improve then Investors will get confidence in the market and they will start expecting positive results and positive return in the market. Their expectations in the market are reasonable. This is a very stable phase in the market and it lasts for longer term. People take wise decisions and their expectations are also met as it is easy to predict.



Unexpected Un- expectation: This situation comes again but at this stage Market is very aggressive and buoyant. People take decision from heart rather than Mind. And there expectations are unreasonable and unrealistic. And it leads to a burst of a bull cycle. Then panic emerges and people lose all hopes in the market, economy, Govt. and system, which is again a similar to No.1 kind of situation.

PS : Written on  25th April 2012

Comments

Popular posts from this blog

What I Have Learnt So Far From The Stock Market

Smoking may kill you in 20 years, but trading in stock futures can kill you the next day

Article published in the Economic Times  online on the 22nd of May 2018

From the days of open outcry trading under a banyan tree to high-speed trading in the iconic PJ Tower, the Indian stock market has surely come a long way. 

From being nowhere in 1990 to the world-class infrastructure for securities trading that we have today and Sebi putting up a robust regulatory mechanism, it has been an impressive journey. 
What is not impressive is the fact that the advantage of all this modern infrastructure and systems has mainly gone to four intermediaries, the regulators and exchanges themselves besides, of course, the tax department and brokers. The traders at large were poor back then and have still remained poor. Only a handful of them have become successful in this journey, that also in investing, not trading. Success percentage in trading is hardly 1 per cent. 
Why? Because, it’s not in our DNA. We learn things three ways: by birth when it comes in our DNA; in our childhood through school…

If you follow certain principles in stock market, then the worst situation in market is the best situation to invest- Written on 6th June 2012

It seems to be the beginning of a new bull market. Economy turns around after six months of turning around of stock market. Market reacts to any situation before the economy.
1990 was the worst year in Indian recent economy history. In 1990 we were 270 billion USD economy. But although our economy has grown four times since then, the phase of 2012 is compared to that of 1990. Today the Indian economy is more than 1 trillion USD. Savings rate in India is dropping YOY on higher GDP YOY.
Factors like inflation, interest rate, IIP, GDP, politics, investment sentiments are all against the economy, most of them being on the mercy of political will. Many stocks are at historically cheaper valuation. But, one cannot go wrong in consumer stocks. Since 1990 we have crossed three stages. India is at the third stage of savings pattern.  From a high saving rate with low income to high savings rate to higher income to currently (falling) low savings rate to higher income. Our savings rate has falle…