Temptation to throw the towel

After a massacre that was seen in 2011 in the equities and the performance in 2012 so far, everyone appears to be saying that probably this could be the best time to get out. On surface it appears a good argument, what with the markets providing YTD returns in the range of 16% and that too without any intermediate correction or stopover. This could be particularly relevant for investors who would be invested over the past 18 or so months and seen their investment value erode.

However, just as investment value in the stock markets erode without providing any time to think or ponder, so does bull markets happen when everyone is busy trying to figure out when the next fall would come by. The markets are ever mercurial and understanding that is half the battle won. On a broad thought process level, being plain contrarian would works wonders and as I always mentioned in the past quoting Warren Buffet – “be greedy when others are fearful and fearful when others are greedy”. This mantra is as basic as gravity, alas ever easy to understand but mighty difficult to practice.

Today the market started tentative and swayed between coming close to zero line and then swinging back to positive zone several times during the day. Overall the direction remains positive; however, at some point altitude sickness is bound to set in. There are certainly a section of people who have made too much too fast over the past few days and those set would certainly sell and go away. How much of an impact that would have is yet to be seen. Secondly, there are big boys reporting in the financial space over the next few days which could throw water over the ovens. Finally, the hot air balloon goes up only if the engine runs (read the FII’s pumping in money) and we certainly do not know when that engine will turn cold.

Otherwise, there is no stopping for the juggernaut pulling away stellar returns fro the year. I am just imagining that sky scraper that would be built on the solid foundation that we have built over the past 2-3 years in the corporate space. Meaning, how high can the index go when the structural bull market begins.

Sensex Kalifa – anyone.