Fear, Greed and Low Hanging Fruit
It has been a good correction so far. Stocks have corrected lock, stock and barrel. We had approx US $ 20 billion inflow in 2010 and a mere US $ 1 billion outflow so far in Jan 2011. Even with that outflow our markets have corrected by over 10 % from the top. It means we lack depth in the market, whether when it is going up or down. There was no need to reach Nifty 6336 and now there is no need to reach 5400. If someone needs money then he needs to sell whatever be the prices. Good opportunities are created in such panic selling scenarios.
So let us not focus on Sensex/Nifty support levels. They do not matter and can not be predicted. If stocks that we want to buy have corrected by more than 20% from their tops then we could nibble at them in stages. This is not the market to sell; this not the market to buy aggressively; but this is the market to enter in stages for sure. It is discounting far too much bad news in the prices. So we have a situation where in there are some very interesting low hanging fruit. Only in stock markets can you get such bargains without even trying. Dance in steps with the market, not out of steps with the market. Use this pessimism to buy good stocks at cheaper prices. We will not regret.
rgds
Vibhas
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6 comments:
Dear Vibhas Sir,
This article is a very smartly worded and telling very perticularly about market situation.
Thanks Bhalchandra.
Almost every investor claims to have a long term horizon yet he focuses on short term volatility and quarterly results.
Have faith and conviction and you will create wealth.
Wish you a great investing year ahead.
Happy Makar Snakranti.
rgds
Vibhas
Dear Vibhas,
Nice wrtieup.Many investor thinks stock investments only for short terrm, whereas if you stay invested in Stocks for long term you can get exceptional returns on your investments. Not only stocks but Mutual Funds should also be considerd as long term investment, and much safer than stocks.
DearVibhas Sir,
How are you, where are you? No blog, no communication in many days...Hope all is fine at your end.
one small query - if you see todays candle stick chart for Tata Steel, it has a long up side tail. It shoot up to high of 737 and then closed to 627. It is very strange to have it shoot so high like this. What it indicates? Is it an inverted hammer? (but volume on day is less) or is it any mall practice by existing big players? Does it indicate increased volatility in the Stock? And, does one should keep away from it in this situation?
Hi Bhalchandra,
I am fine. Monitoring markets and busy with trainings.
Not written a post recently because nothing much has changed. Some developments in corruption investigation and a routine market correction are on.
Will check out Tata Steel chart and let you know.
Take care.
rgds
Vibhas
Hi Vibhas,
Just checked out your informative blog.Request u to pl. check my blog-The Third Eye for Nifty Tech. Analysis.
http://aar-vee.blogspot.com/
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