Does this tune sound familiar :
Buy,buy,buy,
Buy on Dips
Midcaps a bargain,
Largecaps are rising,
EPS & PE’s need revising.
Oil's at $ 115,
What’s that I ask,
Farmer, Fertiliser, Oil and Food subsidy bill ballooning
Lets take the taxpayer to task
Buy, buy, buy,
Inflation only a headline number at 7%
Reality Check : Staples and Veggies up 20%,
Milk up 50% Steels up 25%
Salary hikes a dream, Pink slips on the way
But hey domestic consumption story here to stay
Buy Buy Buy
Corporate Margins under pressure
RBI Governor adds fuel to the fire
FX Losses blow the cover
Downgrades around the Corner
Buy, Buy, Buy
Help Boost the Broking Community & Wealth Managers Fees
Bye, Bye, Bye
And Kiss Your Wealth Goodbye
When a market that has lost 30% or more in the past Quarter, gains 10% in 3 weeks, it's a "fabulous rally", always coupled with the tender question: "could it be that we have seen the bottom of these markets? Might it be the right time to jump back in?"
And, sure enough, you find a whole ballet of equity salesmen pirouetting through the various media telling you just that. Banks are cheap, Tech and Telecom the new leaders, All or more earnings in line with estimates (the estimates were so low anyway). Go bargain hunting. F & O positions are low . Time to think about coming back in. Don't miss the boat. Blah Blah Blah , Bloo Bloo Bloo.
Betting on rising stocks in a bear- market environment can be as dangerous as crossing a busy six- lane highway. Many investors take the risk anyway.
Motivating them, besides a whole host of wealth managers, is a desire to recoup losses from the three month decline in the equity market and memories of the bull- market run from April 2003 to October 2007, when investors were rewarded for buying on market dips.
I am not even arguing whether they might be right or wrong. I am just saying this: a car salesman will ALWAYS tell me that THIS is the right time to buy a car. Will always tell you that the car HE has is the one you must buy. That’s his job. That's the way he makes his money. It's the same with the Wealthmanagers. They make money by selling equities.Nothing wrong with that. It's their job. Or would you blame your fruit vendor for praising his alphonso mangoes ?
But it's up to YOU to decide whether and when you want to buy those alphonso mangoes. Same with equities.
Instead of adding to their holdings, investors should consider using the rallies as an opportunity to sell shares.
Regds
Dinesh Khemlani
