Monday, May 22, 2006

Attitude on market crash

Kuppusamy Chellamuthu

There was a cartoon in the Sunday edition of Hindu Business Line. An investment advisor is seen with band-aids on his fractured forearm rapped around the neck. And he says, "Yes..the same guy who sent me sweets when the Sensex first reached 10,000, did this now"
How true? When the market reached 10,000 points fro 9,000 points we all were delighted. It is hardly 3 months from then and the situation is no bad than it was then. What is the reason to feel sad?

Some people bought at low levels and hence afford to appreciate the above logic. But what about folks got in at higher levels? 12,000 and above.. what the **** is the problem? You buy a house for Rs.10 lakhs as you are fully convinced that it is worth that money. Some days later somebody offers you 9 lakhs to buy the house from you. He also sells a similar house he owns for 9 lakhs to another guy. In fact he is also ready to sell another such house to you as well for 9laks. Is it not good?
How does that affect you? Some one else selling his property should not affect you as you bought it for what you thought it deserves. Right? Then why worry??

Indeed it should make you happy. I tell you why.. you buy a business for value X and the same business is available at 0.75X with in days. There is absolutely nothing to worry. May be the ones buying now get it much cheaper than what you paid. But you certainly did not pay much if your decision was not influenced by the market condition and performance of others.
While it is true that this is hard to digest as emotion and money are involved here in great deal. But still we all learn from mistakes, sometimes our own and sometimes from that of others. Learning is not learning until it helps avoiding the same mistake again.

If you had bought with though of selling your positions off at a higher level (say 13 k or 15k), then by definition you are not an investor. No one would say, "I invested in a house for 10 lakh and would sell it for 15 lakhs after a week". He is trading/manipulating/speculating and for god sake not investing. If that is the intention people buy stocks with, yes.. this mail might seem another bluff....

This group has some successful derivative trader and I am not really sure how far it would be appreciated by them. I can afford to talk philosophy even in pain. When compared to the deep declines in January and April 2005, I am doing better with October 2005 and May 22, 2006 declines. Wait until a good ball is bowled. Mr.Market sees nothing but negative things for the investment and real world these times.

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