I have a friend Mehul Desai..this is about his friend..not about him..he told me this story…

My friend has this infuriating habit of saying so what to anything which has, even distantly, bullish connotations. He has been born a bear. No…not that way. But he has never been able to trade positive. Somehow he has always attached negative sentiments and reasoning as far as India is concerned. Some examples of conversation with him:

Hey India GDP likely to be around 7.6% for next year. …
His reply…So what!

This is higher than growth rate of almost all other countries.
His reply ….So what!

The markets have come off from 9000+ to 7150 odd. Good healthy correction.
His reply…So what!

Price of oil and commodities have come off sharply augurs well for India. Input costs for user industries have hence come off sharply.
His reply …So what!

Interest rates have fallen separately and likely to fall further.
His reply….So what!

The DIXY chart is cracking. The USD has fallen from 99 to 96 and is expected to fall further. This will undoubtedly aid the INR.
His reply…So what!

Global markets have fallen due excessive expectations. And like in bull markets this fall is excessive and overdone.
His reply…So what!

Various govt initiatives will start kicking in. Bank npas, discoms getting restructured. Further reforms expected either in budget or just before.
His reply…So what!

Further stimulus expected from China, Japan and Euro zone. Combined with no further increase by Fed. Yday the Fed Chairperson said further increases are data dependent. She also said that events in China and other countries will adversely affect growth. From four increases anticipated by economists even one appears to be a remote possibility.
His reply …So what!

He went on to add…why he thinks there is still room for further downside.
Problems in China are greater than what is envisaged. Chinese banking problems could boomerang and the Lehmann fall would be like a walk in the park.

The refugee problem could get worse and the Euro zone could take a hit.

In the flight for safety USA yields are falling and Japanese yields are near zero. Even the yen has rallied. Completely risk averse environment.

See the media, the press. …all are shouting gloom and doom.

In such a situation money just vanishes and investors put a freeze on their investments. Wonder why this tends to happen when the markets are almost at the bottom. The purses open out soon as there is a semblance of bulls returning.

I heard his argument and logical as it sounded was not convinced. (Such is human nature. ..forever optimistic) surely not the time to throw in the towel. Yes there is panic on the street and everyday the previous day’s price seems to a good price to book ones sales. This is the time for patience for when the market turns it will not give any buyers chance to buy. Don’t watch TV …they are all instrumental in promoting panic.

My point is we are all long term investors and if the market comes off even another five percent….So what!

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  1. sir I have a stupid question
    already my equity mutual funds are currently -20%. I don’t have risk tolerance more than that

    I will continue my sips but I am 2 minds whether to withdraw current balance and keep it in debt fund ?

  2. @ lakshminarasimman
    ignore low/high risk tolerance bullshit; if you cannot stomach more downfall, move to debt.

    In the long term, we are all dead – not everyone has the discipline, presence of mind to withstand this volatility – alpha is good, but peaceful sleep at night is better.

    Be decisive, either you continue SIPs and ignore noise [or better, add to the noise and increase your SIPs]; or, move to debt and sleep peacefully.

  3. mangoman thanks for reply

    i definitely want to continue my sips
    but my doubt is i had around 15 lakhs in mutual now it is worth only 10 lakhs . should i move my 10 lakhs to debt to conserve it now and do sip or leave it as it is and do sip – ?

  4. @ lakshminarasimman
    so what you are asking boils down to “will the market fall further”?
    Let me ask that to my crystal ball – be right back.

  5. either you believe in equity markets or you do not. Either way you are right. It works for the believers and the non believers. Make your choice.

  6. FPI remains the villains of this piece they win and loose either way….the 6% retail Indian investors are no match for these fickle minded horses. But one thing is certain, if you have the guts then open your purse now and forget any sips for next 2 years…

  7. I am loosing money, but I am not bothered.

    Till the time retail investors stops investing, market wont recover.

    Retail crowd is still investing, so I dont believe market will stop falling.
    Today CAMS office was full of people looking to submit MF forms.

  8. if you are in market for long say another 20-30 years or more this kind of fall doesn’t matter.
    keep investing like you were doing earlier and enjoy the up’s and down’s.
    i am under watch now ,will invest my surplus money when the market goes down another 10% from this level and invest more if it goes down 10% again ,who care’s if it touches 8000 again.

  9. Many stop losses would be hit in down market increasing further sell and redemptions. Another 5% hit, DII would be hit hardly with redemption pressure taking the market further down. I see further downside of 20% just on the investors inability to absorb further losses. The problem with the downside is, before we think of any decision, our portfolio would be down 5%, 10% and 40% so rapidly that it leaves many shell shocked and loathe for the market.

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