“Taare” zameen par...

Warning: Not for the faint hearted !!!!!!!!!!!!!!!!!!!!!

It was Tuesday morning ,10.00 am to be precise , a working day for the Indian markets and yet the NSE was not trading…Surprised !!!!!!!!!!
If you are a faint hearted this one is not for you. The Sensex hit the lower circuit(4th time in its history) in the early trade suspending BSE/NSE trades for an hour , thanks to the recession fears looming from the US economy on the back of swelling discouraging numbers on jobs, consumer spending and housing. It’s almost a universal crash. All the global indices have plunged into the sea of red in the past couple of trading sessions. The start of 2008 has seen sensex tumbling from 21k to 15k levels just within a matter of few trading sessions. Billions of rupees washed out in few days.

A question to ask here : As an investor what should one do?
Well as “History repeats for itself” are lots of lessons to learn here:

Don’t just buy . Invest & Engage yourself in the business.
Investing is not just buying and selling stocks. If you like some business don’t just buy , invest & engage yourself in the business. Follow the business, evaluate the performance and think as if you are having a stake in the business. This will not only help u in getting more information but will help you in making informed decisions. Remember that over the long term the returns on the investments are much more significant in value.

Always Stay rational in an irrational world.
Markets have seen the irrational exuberance in the past 6 months or so (which is not new to the markets). We have seen the Sensex making record highs in late 2007 almost every month. Paper stocks were getting valued beyond anyone’s imagination. The “rational” of the business was kept aside and the price was getting traded irrationally .Sentiments were driving the markets in some cases rather than the fundamentals. If you look at the history of the markets it has its own way of punishing such punters and when it does that you will just see the carnage on the streets as we have witnessed in the past sessions. However you will always find value in a bull/bear markets no matter what the scenario is . It’s just a matter of being patient and staying rational.

Evaluate before making commitments and always take informed and responsible decisions:
Risk comes into picture only when you don’t know what you are doing.
Today the world is a global village and its prudent to stay informed about the latest and greatest. Just look at the recent subprime crises & recession fears in US which triggered the meltdown of the global markets which makes us believe that the decoupling of individual markets is a difficult thing in reality. So it’s very important for us to get plugged-in to the global events.
Again numbers matters the most when making any investment decision. It’s very important to evaluate the business before making any commitments.
Remember that the information is the most key weapon in the stock market .The early you know the safer you will be with your decisions.

Remember that stock will eventually follow the business. It’s just a matter getting informed , being patient and staying rational at all times.

I hope the above information will help you in making better decisions
Happy Investing.

Thanks,
Nitin Mahalle

Disclaimer: The opinions /views present in the above blog do not reflect any personal interest and are purely based on the renowned thoughts.