I would have called this a million dollar question. However, thanks to this great meltdown, let me call it the Trillion dollar question.

The Optimistic view: the world loves a bull market. The world loves a winner. The world loves to see the “good” man win – that is why we pay millions of rupees / dollars to see movies. So speaking optimistically:

1. India is growing at 7% if you believe the pessimists and 9% if you believe the optimists. Anyway it is way above the world average, so investments will flow in.

2. Oil will hover around 90$ to the barrell and that is good news.

3. Our working population is huge, and has a fantastic capacity to earn, save and spend.

4. Our domestic investors have put a small amount of money in equity markets, as they invest more, markets can only go up.

5. Rakesh Jhunjhunwala says markets will go up. He cant be wrong, can he?

Now, sadly for the other side:

1. We are nowhere near the beginning of the American problem. Credit cards, Home loan defaults, Pay day loans, – we have not begun to touch the tip of the iceberg in the American problem.

2. Indian IT companies will have a huge drop in earnings – thanks to the American problems.

3. The turmoil in the banking/ investment banking / financial services industry world wide will ensure that less money comes into the markets.

4. Down turns could be for short term – say 18 to 24 months, but secular bear markets can keep the index same for long periods. Remember the Dow remained at the same level from 1970 to 1982.

5. Shankar Sharma says the sensex will not reach 100,000 in his life time. Assuming he lives for another 35 years, it means the Indian markets will grow at a rate LESS THAN 5.8%. Now if you provide for inflation at 7%, you will get a negative return. Shankar Sharma cannot be wrong, can he?

So, which view would you want to take? Optimistic or Pessimistic? Make your choice. All yours!!

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