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Vijay L Bhambwani's page - updated monthly |
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Are you prepared for 2004 ? - Jan 18, 2004 Friends, As the year 2003 has gone and taken with it our hesitation, doubts and fears about the prospects of the bull market ahead, a question that is nagging me as a market watcher is - are we really geared to handle the markets in year 2004 ? The talk in all the public forums, media and investment circles is the return of the retail segment to the equity cult. The rally is likely to be fuelled higher by the pent up demand, expectations and ambitions of the retail investor. The retail buyers are likely to take the baton from the operators, institutions and savvy FII players who have entered at the initial phases of the bull run. The fund managers expect that retail buyers though buy a few hundred shares at a time, total up to large numbers over a period of time and help to broaden the base of the markets. Therefore selling by operators who wish to book profits will be absorbed by retail players. While this argument appears sound prima facie, there are holes in the theory. The markets are not likely to behave in the same fashion that they did in 2003. Consider this - You start your run upwards on a flight of stairs, confident of reaching the top. Your energy levels are always higher at the bottom, when you commence your ascent. Your enthusiasm levels are high and the climb is rapid. However, after a few hundred metres, your lungs start rasping for more oxygen, your heart pounds loudly and your thigh muscles get sore. You need a breather, your rate of climb slows down considerably. The markets are similar in their behaviour because they are made up of collective forces of mass participation. I feel the run up in the indices from 3000 and 1000 on the Sensex and Nifty respectively to the 6000 & 2000 plus levels was the easy part !! It is similar to your run up the stairs where the first few hundred metres was easy. The climb above these levels is more measured and slower. It also necessary that the run upwards be steady rather than in bursts, or it will not be sustainable. Markets are comprised of many stocks which should be compared to people running up a flight of stairs. All stocks do not have similar momentum to reach the ultimate top that you wish to see, some will flat first, some later, but few will reach the promised land. So control your desire to get rich quick and think before you borrow funds from one and all to "invest" in shares. The markets have evolved radically since the last retail boom in 1999 - 2000 and not all players have what it takes to trade these markets. Upgrade your skills and then take the plunge. Never mind if you miss a few opportunities, it's never too late. A citigroup advertisement as shown on CNBC India comes to mind, and I quote Mr. Clark Winter - " I have noticed a particular trait in successful people. They know what they are good at, and hire others to do what they can't handle." I feel investors who don't have the requisite skills to tackle these markets should take professional help and then indulge in their trading desires. Believe me, the small sum of fees paid is better than lose a few thousand on a single derivatives trade that turned out to be a sucker !!
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