Those asking ‘when will the market boom’ need to be asked ‘what have you been smoking’?

Look at the world markets and see around…I can see the following…can you?

  • World wide boom except Russia and maybe a couple of others
  • Most markets are near their top – say within 10% of its ALL TIME HIGHS
  • World markets are hitting those highs with low volatility – fund manager’s delight
  • 2 out of 45 countries are in the red on a YTD basis
  • The party is too good to last, control your GREED at least partially
  • Good time to be a little FEARFUL  – with 10% of your portfolio if not more
  • Benign Central Bank view on markets – ha an aberration!
  • Interest rates are falling – thus shares and bonds both are up!
  • Most economies in the world are expanding – Even Europe is looking good after a long time
  • Annualized GDP growth all over!

Not sure if it can get much better. However, I am not saying it will get worse. Being invested during good times is actually far more difficult than being invested during bad times. For investors this can be tough. The challenge is that just because something is really good doesn’t mean the next stage has to be bad!

Go back to 2004, market had just gallopped from 2000 to 4000. At that point it would have looked like a great time to sell – who wants more than a 100% return on shares? If the next stage were to be bad (learning from History!) the game would be easy. You would just short the market today and wait until everything is bad next month (or week or …) to buy everything back at a lower price. Sadly (even happily?) that’s not how the market works. Sometimes good environments continue to be good for a long time (2002 to 2007) and even when they’re not so good, they are better than the debt market!  Importantly, investors can still make money in the share market’s transition from good to ok.

While the good investing opportunities (invariably) present themselves during bad times, we may not be paying attention. However, markets go up slowly and gradually, and there are plenty of opportunities to buy. Forget the tops and bottoms – give it to the amateurs, professionals find it diffifult to catch them, especially with huge amounts of funds. There are many more good times than bad times – thus getting into the gravy train a little later is not such a bad idea after all. It is challenging for investors to stay invested during good times as it is during bad times. Most of us have a hard time accepting that good can continue to be good just as we have a hard time accepting that bad will not be bad forever.

As good as it gets? Maybe. But that doesn’t mean it’s easy.

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  1. I strongly believe the market rally consists more of the FIIs rather than the DIIs. Anyway the financials parameters of our country is better than before and so in bad times we would be able to defend ourselves better. In the bull market the stocks having better financials provide returns, understand that. But why do shares of these crappy smallcap stock also rally in bull market. But Why would someone buy crap even in bull phase? Inputs?

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