Saturday, March 15, 2008

Bull or Bear?

Every time I get up (very late) in the morning, it is the market that is always discussed. My father finds ‘the rise’ much more intoxicating than the coffee that is served. A couple of red down arrows shoots up my mother’s blood pressure which even my sibling has not managed.

The start of every year usually shows promising high value shares but this year has been an exception. Nifty declared an all time high at the end of the last year and has somehow managed to hit low recently.

So, as a habit I ask-Why markets tumble?
The first market crash occurred in 1929 and Benjamin, an analyst put forth 3 main ides regarding this-
1) Excessive optimism
2) Manipulation of money and stocks (even an amateur could handle them)
3) Lending of money to the investors.

The factors simply went out of hand
As investors or buyers or sellers, we could have anticipated this tumble but took a convenient seat because of certain bullish factors:
1) Even if the US markets crash, the rest of the world (Asia and others) would take up the burden.
2) In the global level, only profits are high.
But, the picture isn’t as pretty as it was thought to be. When the US market crashed, the others literally followed. The main reason being that strong hold countries like Singapore, Japan and Malaysia had exports to America equivalent to 20% or more of their GDP compared to 8% in China and 2% in India. This has called for recession in most of the sectors like the IT, Banking and retail. All sectors go hand in hand and the case might likely turn epidemic.
The pessimism in the markets may or may not be for long.No, it is the not duration but as a common man, can we sustain with the crash for long?

1 comment:

Anonymous said...

Shabbbaaa.. mudila..

At 35 - Replying to a post from 10 years ago

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