Subra  How was the market in 2016 and what do you think the market will do in 2017?

Answer: I quite liked the question about 2016 – I am sure there are enough websites which will tell you that the over all market went down by about 1%, and a few sectors did well and a few did badly – you really do not need me to fish it out for you, right?

Regarding 2017, let me speculate what can happen. The calendar years 2015 and 2016 have not been to great for the equity market so going by probability, 2017 could be better. However, having said that I know that the years 1999 to 2003 were all bad and in the red – but I am talking financial year here. So 3 bad years in a trot is possible, and I will not be surprised or shocked if it is so.

I have no great understanding of the macros, but I can assure you that the market may or may not tell you how the economy is doing. However, I can surely tell you that the share price will keep pace with the EPS – and if the company consistently out performs the market predictions, and the market believes that, then the PE will also change, and create a magic in the share price. Yes, it is possible. I refrain from making such predictions because I don’t actually know – however when I make this statement, I am accused of ‘not wanting to share’ without any payment. Lol, not true at all. In fact, no one knows —but some of them are paid to think that they know. The market expects them to make some noise like – market is good in the real long run, if the markets have gone nowhere in 2 years, this year it surely will go up next year. How markets are at a historical low and can only get to a higher PE over the next 4, 7, 12 years. Some others just think they do, and they are dangerous. I am thankful to God, if I did know I would be raking in billions, but paranoid about losing that touch!  A far better and superior approach is creating a disciplined strategy that makes seeing the day-to-day movements of the stock market UNNECESSARY. By picking a sensible  asset allocation of shares, bonds, liquid funds, etc and sticking to it and re-balancing (selling when one asset class goes up fast and buying when they drop), the investor is perhaps better positioned for the long run.

I am sure you are the one who calls who needs predictions when you are wondering what to do about a plan?

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