In thirteen trading days from an intraday low of 8047 on March 6,2009,the Sensex is once again kissing 10000….moving up near 25%
Getting a lot of calls…basically to make some sense of this rally
Is this the beginning of the recovery and have we seen the Bottom of 8000 for the Sensex and the October 27,2008 low of 7697 will not be tested ?
Is this just a Pullback rally and we shall see the Sensex breach 8000 again in 2009 ?
I hold the view that the macro pains have yet to unfold in their entirety…This rally is a strong counter- trend and a powerful one at that…. we shall see such bounces on oversold markets…Maybe the Bottoms may not be tested for a while…but they will
In fact even on October 27,2008 when the Sensex touched a intraday low of 7697,it swung back sharply within just three days to close at 9788 on October 31,2008 !…and it had begun October at levels of 13000 !
If you think the WORST MUST BE OVER ,then think again !…Sensex at 11 and 12 multiples may appear cheap against the 25 + Multiples we had in January 2008….With Earnings slowing down,we’ll probably see single digit P/E,trailing and forward, on the Sensex in 2009 and that would sustain for some time
The Dow took 25 years to regain it’s 1929 High…It did so in 1954 !…Our wait for the Sensex to regain 21000 should not be so long !…Right Now I see Stressed Prices but not Distressed Prices on our Bourses…..These will come in 2009 itself and give you some great buying opportunities.
Ask an Investor who got into Unitech at Rs 500 in January 2008,whether he’s excited with this rally !…he may be too shell shocked anyway to respond !
The poor Bloke saw a 95% erosion to Rs 25 in just over a year….he now needs to get a 1900 % surge to recover his loss of Rs 475…so if Unitech has gone up 40% from Rs 25 to Rs 35 how does this matter to him !….so don’t live under delusions and the phony excitement being generated by experts and TV Anchors on the Stock Channels of this “big” 40% gain in Unitech
These swings require you to have a Traders Mentality to capture opportunities…and that’s a tough ask….I thought Investment was about Investment !…not Trading or Speculating !
So what do you do to recover from being Hit last Year in Equity ? Some Thoughts….
Just Holding on to your Equity Portfolio may not work as some scrips may have seen permanent erosion…so review and reposition…believe me taking a real loss than sleeping everyday with a notional one is a big relief !
Save/Hold/Generate Cash to capture greater opportunities ahead
Hedge your Portfolios against declines…the volatility is just too unnerving
If you must Trade then do so with strict stoploss
Use upswings to exit some holdings to create cash to later capture scrips at distress prices to reposition your Equity Portfolio
Be prepared to adopt a tactical,rather than strategic, approach to capture great opportunities
Get some significant Gold exposure in your Portfolio…Physical or through ETFs
Ensure proper Asset Allocation to suit your Risk Profile and be disciplined in the rebalancing exercise when predetermined allocation ranges are breached
You’ll be deafened and confused by the divergent views and the cacophany being generated on the channels and the print media by a host of Experts and TV anchors
Try some Independent Thinking….after all it’s your monies at stake….If you’re going to stick your nose at ‘Monalisa’s nose you’re not going to see her smiling at you from whichever angle you look at this Leonardo Da Vinci Masterpiece…..Stand back to look at the whole landscape and get a feel of the macros…only then you’ll get a feel of how they intensely impact the micros currently
There are Plenty Opportunities coming up…It’s better to be prepared and not get them rather than you’re faced with them and you don’t know what to do or don’t have the cash to do so !
Value and Price are two very different Issues…Milk in Mumbai is sold at @ Rs 25/litre….would you buy it at Rs 60/litre ,even if it’s a Swiss Cow giving it !?….But when it’s at a distress Rs 5/litre don’t question the buying opportunity by being skeptical and saying ” Doodh meh kuch kaala hai !”
I made strong contrarion calls in 1992,1997,2001 and 2003….missed the speed,scale and intensity of the USA Financial Fiasco that has burned the world markets….I’m gearing to make a contrarion call again in 2009….so these bounce back rallies are only delaying distress prices on the bourses and therefore my call….I’m patient….even if this bounce may take the Sensex up to 12k
Get the Point !