Wednesday, May 9, 2012

The Merry Month of May

So wrote James Jones in his novel about the student revolt in Paris.It was about love and betrayal and the passion about ideals that drove people.Unfortunately the equity markets have been most un-merry in April and May.

"Those who cannot expect to lose 50% of their portfolio during bear markets have no business being in equity - Warren Buffett

I am reminded of this by a surfeit of phone calls from clients disillusioned by this market.I met a gentleman during my travels who has been involved with equities for the previous 22 years.Last 3 years he has suffered a loss and talks about getting out and doing something different!I mean 3 bad years out of 22.....?Whats the ratio?

I have given this as an example because people/investors/traders tire very quickly and this to-ing and fro-ing,be it in equities/commodities or even different mutual fund schemes will leave you frustrated.Just when the markets are about to turn these kind of people shift their focus and then repent or blame their luck!

Important to have that focus and passion,so if you feel that investing in equities is the way to go then stick it out.Most investors make money by chance because when the news and markets are at their worst,people simply refuse to buy,although everyone knows the adage,"Buy low and sell high".

The elections in France and Greece have cast a pall over the world although the rise in home prices in the USA bodes well for the global economy.In India the negative balance of payments situation and 4% current account deficit is being crucially highlighted.To me of more concern is the government apathy and if we have to wait till 2014 for reforms then things will get worse before they get better.

Corporate results still show a 10%+ growth in revenues and there are a lot of fundamentally good stocks in the market quoting close to their PBv.For investors a good chance to keep accumulating if the nifty does show 4600.Good value assets come cheap only when panic happens and even now I am yet to see that stampede!!