The Financial Crisis of 2008 was yet another unmaking of the small time retail investor in the Indian stock market. He was dazed by the rapid turn of events and bewildered by the sharp downfall that had little to do with domestic factors and valuations.
I don’t say this out of academic interest – I happened to be there and experienced the fall first hand. They say, ‘never try to catch a falling knife’ and yet so many of us rationalized the losses to average our holding price only to be hammered down again.
None of the big market movers too saw it coming but at least they were smart enough to react and make it to the exit door. The common man was too slow to react and was left holding the can.
The signs are back again – there is a marked volatility on the Indian stock markets as well as INR trading rate vis-à-vis the US Dollar. Theories abound and Indians never cease in their ability to pontificate, jargonize and speculate to the point that one feels like it is a case of ‘analysis-paralysis’.
Thankfully I am a mere bystander this time round and no longer have my skin in the game. It surely helps to observe the circus with a more objective eye and even be amused by our antics. The nervousness leads to a false sense of bravado as amazing pronouncements are made about the future. I am not even saying that some of these predictions may not come true tomorrow but surely not all of them will – and that’s the point. There are two or more points of view about a stock or an index and they drive the market. One then wonders why people so hate the naysayers and make it their credo to get them to jump from their fence.
There is the notorious tip market that never quite goes away – the most reasonable and logical of men fall for the bait. The lure is the same as ever before – the initial bites lead to reward and the common Joe then goes and bets his shirt of the deal. And he loses his shirt as well and yet never quite learns his lesson.
End of the day needs to see a pronouncement that needs to do two things – explain today’s madness and predict tomorrow’s trend. If one had the time and energy, we could easily glean triggers from the business environment to explain anything that happened today and what will happen tomorrow. It is as good as tomorrow’s weather forecast – it doesn’t matter on most days and seems to be accurate. It just lets you down once in a while and one wanders as stupidly as being caught in a sudden downpour without the Umbrella at hand.The guy on the street may not be articulate but even he can give you a view that explains it all. The transactional nature of this analysis does not help as one ends up missing the forest for the trees. In hindsight one ends up wondering about what went wrong.
I gave up chasing the markets years ago and the time it frees up is a boon indeed. Not to mention the blessing of not having to deal with the anxiety of worrying whether ones pet theories being blasted to bits. Sure I have heard stories of things being on the mend and some bloke or the other having made a fortune by entering the market early this round. It is tempting to be lured back to the game – fortunately for me I am not in India now. And it is too much time and effort to manage this remotely. So the feeling kind of fades away.
But a spectator can surely revel in the sports and I can sense that the big game is underfoot again.Well history repeats itself, first as tragedy, second as farce. So you heard the talk about US Fed Reserve’s plan to gradually raise Interest Rates sometime this year …