http://www.moneycontrol.com/india/news/market-outlook/it’s-all-over/388853 Column: Market-o-logy
It’s All Over *“**The most common cause of low prices is pessimism - sometimes pervasive, sometimes specific to a company or industry**.**” **- Warren Buffett* *By Haresh Soneji, CNBC-TV18* Every time the market bounces back from over sold territory, the Bulls waste no time and bounce back claiming that the bad news is over. At the risk of being framed as a permanent Bear, let me once again re-assert – there are no ‘V’ shaped recoveries in this kind of a global economy. Yes, any pull backs are positive and good for the trading community. But, ignoring the complete picture could be futile. At no cost, any trader, speculator or investor wants to commit the same mistake again. Having said that, let’s take an analytical view at some of the theories doing the rounds in the market. There appear to be three credible ones doing the rounds. *Near The Bottom* **We are somewhere near the bottom. That’s easier said than explained. I mean the bottom could be 10-20% away, or 30% or maybe 40%. The reason is the earnings visibility and economic stability. At this point in time, most analysis point out an economic recovery post H2FY10 and so a bounce in the earnings. Based on this analysis, the forecast that we are near to the bottom seems faulty. The truth however, is that there is visibility only for the next couple of quarters. Uncertainty prevails post Sep quarter. Yes, the low base effect will come into play after a few quarters, but a top line de-growth is a given. *Nowhere To Go* **It’s the election season. A section of the trading community firmly believes that the market will head no where till we are done with the elections. Now, that’s almost three months from here. The argument on this theory is that even if the market heads no where, there will be bouts of volatility. Maybe, the current pull back is just that. So, if you’re a trader/speculator sitting on the edge you have surely missed a strong pull back. The short conclusion to this theory therefore is even if the market remains around the same levels, volatility could make you rich or poor, depending on whether your on the right or wrong side. *The Worst Is Over* **This line is the mouth piece of India Inc. the next quarter will be better, the worse is over, demand is picking up, do not see any pricing pressure, working at near full capacity, raising capital to meet expansion plans etc. the question to ponder on is at what point in time India Inc. has not stopped to be bullish. Sell-side analysts and your friendly neighbourhood brokers are quick to capitalize on this theory. India Inc. talks about business confidence. But, that’s different from consumer confidence. These are tough times and any turnaround has to begun from the consumer. And the Indian consumer is not optimist at this point in time. The CNBC TV18 Boston Analytics Consumer Confidence Index is a leading indicator on this front and its at its lowest level. Signs of recovery if any will be first witnessed through this lead indicator. *Conclusion* **Most Bulls hate me for this. But, there are enough reasons to believe that none of the above three theories have a high probability, at this point in time. The fact is ‘It’s All Over’ appears to be the key scenario. Visibility is poor and the US and world economy is in a big mess. One simple instance can be found in the US budget pages. If you analyse the fine print, it is clear that even Obama does not expect a recovery before 2011. The question is will the world revive before the Big Daddy. If your answer is in the negative, you know what to do. Yes, short on every rally. *Disclosure: The author is not permitted to trade and/or invest into the equity market directly or indirectly, apart from investing (long only) in mutual fund products. His equity exposure is only to the extent of ESOPs granted by the employer.* -- Best Regards, Haresh Soneji +++++++++++++++++++++ END PIECE - CRY PLEDGE "Before anything else, I'm an Indian. And so is this little child. The rights I enjoy as a citizen of this free country are hers too. She has a right to be free. She has a right to be happy. But I'm going to fight for her because she has the right to be a child. I'm going to fight for her every single day, every single moment. With my skills. With my resources. With my heart. I'm going to fight for her because I can. And she can't." +++++++++++++++++++++ --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
