OPTIMISM ALONE DRIVING THE MARKETS

about 2 years ago
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By Ruma Dubey

There are such clear signs of trouble brewing on the macro economic front – slowing economy, inflation slowly but surely rising its head and fuel prices are once again on a boil.

Yet, the market are happily perched on a rising wave; oil marketing companies are high up as the Govt as assured that there will be no tax rollback despite fuel prices spiking to three year high. Unmindful of how this affects the sentiments and the pockets of the people, the market is surging high up.

So the question which those not-in-the-market always ask nowadays, “why is the market going up every day? What is it celebrating?”

Well, our reply always is only one word, “optimism.”

The mood remains optimistic despite these not-so-good truths. But then is the market looking ahead and discounting a better picture which we are not able to see today?

See, this is exactly how data is being fed to us. We read and watch and hear only good things; all that which is uncomfortable is brushed aside brusquely. This is what the media does and those putting out these grandiose reports do. They write and talk only good things because it is good news alone which pays today. Not just in India, all over emerging markets, this is the trend seen – advisors are giving out only a shining picture, the pretty graphs and detailed write-ups and presentations, all throw up such a good story, always. No one digs into the details, looks for data which is not visible to the naïve eyes.

Thus we have optimism because we get and seek only optimism. It’s a good thing, to always remains positive and see the markets jump to new highs every day. But somewhere, there has to be an air of caution, an inquisitive mind which needs to find for itself if all is indeed as hunky dory as it is being presented.

Our word of caution – do not dance to the tunes of the FIIs and Sensex. Better to stock up on quality stocks like always, with only the long term perspective in mind. Mind you – even if a long term investor, take stock of your inventory. If you are sitting on a pretty gain, book partial profits and use the money to pay off your car loan or do your house repair or pay for your child’s tuition fees. And if you have loss making stocks, sell them now so that you can use the loss to offset your gains.

Thus even if long term investor, don’t ignore the market; celebrate the bull run, get drunk on this overflowing cuppa of optimism but don’t drive your finances in this intoxicated state.

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