Monday, May 26, 2008


Do you remember the stock markets in 2002? The whole world was recovering from the aftermath of the September 2001 attacks. Amidst all the gloom and doom, everyone and his uncle were advising you to sell stocks and get into good old fixed deposits. In fact people were talking as if markets would never rise again and any fresh investments made would fall even further. Further? Think about it now. In 2002, BSE Sensex was at 3200 levels. True, it may have gone down by a couple of hundred points more, but with the benefit of hindsight, just think how ridiculous that advise was.

So do not panic. Treat market falls as your friend. Remember the advise of Warren Buffet who said “ If you are in the market for buying apples and the price of apples were to suddenly fall, would you be happy or sad?” Think about buying stocks as you would about buying businesses. The same solid business that was available at Rs.500 a share barely 6 months ago is now being priced by the market at Rs.300 a share. Consider this. Everything about the business remains the same. Its growth rates, business prospects, quality of management – everything. Only you are getting it 40 % cheaper. In a few days it may fall another 10%. So what? It still remains a great business. If you can, buy more.

Remember, in spite of what the pessimists tell you India is still growing at 8%. Very few economies in the world can match that. Wages are increasing across categories. Millions of people are crossing over to middle class status every year. People are buying new homes, new cars and what not.

Do not let experts tell you that oil is at $ 132/bbl, so we must slow down. We may, but again we may not. We did not slow down when it went from $ 20/bbl to $ 130/bbl. And who knows, oil may come back to $80 levels before soon. These are the same experts who predicted that Indian IT companies would face rough weather because the Dollar had fallen against the Rupee and would fall still further to Rs.35 to the Dollar. And Infosys gained nearly 40 % in this period.

Therefore act with courage. Courage is not the absence of fear. Courage is the ability to act, to move ahead even when you are afraid. After you buy, even if markets fall further, remember the past. Markets have to recover at some point of time. And when they do so you will not only recoup your losses but overall your gains will far exceed interest earned on some stupid fixed deposit. Only remember to invest in quality. Do not buy simply because a stock has fallen sharply from its highs.

Don’t you think India will be a major economic power in the next 10 years? So make the most of that opportunity. Your chance is NOW.

1 comment:


So you do not repeat the mistakes of the past in the future.