Friday, August 22, 2008

Weekend Nifty

Friday evening is a good time to review the market, take a slightly longer term view, wander about, sit back and relax.
The Very long term:
This is a long term bull market. Such secular bull runs last for 18 to 20 years. We started in 2003, so there is a long way to go. To classify this trend, we will call it " long-lasting".
Within this long lasting bull run, there will be many bull and bear cycles. We will call such moves - Primary trend.
Currently, the primary trend is down. This is a bear market.
Moves that last three weeks to three months inside a primary trend are called intermediate movements. We had an intermediate uptrend that pushed up the Index 22% in one month. This trend is completed, and the intermediate trend is now sideways or down, dpending on how you measure the swings. Some of this is subjective.
Within the intermediate trend, we have minor moves, but we are not concerned about these moves here, although as traders, the minor moves are of great relevance, when trading.
If we are in a long lasting bull market, why are prices not going up ?
Within the long lasting market, prices will move up and down - both. We are in the down cycle. It may last for another one year. Then, a revival may start which could take one or even two years before touching the highs made in January 2008. Also, if you bought RNRL at 250, it may take five years before you get those levels.
Has the bear market found its lows in July 2008, at 3800 ?
Too early to say this. At 4325, we are just 500 points away from this low. Another crash or debacle can bring us down to those levels, rather quickly. Also, bear markets must be given time to complete their purpose - remove all excesses from the system. Seven months is not enough.
If this is a Long Lasting bull market, then more money will be made by bulls.
Yes, absolutely.
Patience is the key.
Also, your ability to finance your purchases. If you are investing on leverage, then it is unlikely that you will benefit from the long lasting bull market.
Finally, the quality of your equity holdings. The portfolio with blue chips will benefit much more than a portfolio with all sorts of momentum stocks.

3 comments:

paragblr said...

nifty sept option 4800 CE is trading at 23 and 3800 PE is at 35
If one buys 2 lot each the investment would be say 5800 .
When could the strategy fail to make money . I would assume that would be the case if nifty remains rangebound between say 4200-4600 . Correct me if i am wrong . As such is it a good strategy

krunal said...

i hate to disagree with u on this sir for the following reasons:-
* we live in a fiat currency system
* those fiat currencies have been growin too rapidly nearly more then 20%
* commodities on the contrary are finite substances (fiat money gives central banks the power to produce an almost infinite amt. of money example :- zimbabwe)
* the growing current a/c defecit of U.S. (i.e. the USD) is unsustainable & need or if not given will implode itself
* if there is too much money in the system chasing too few commodities it's no brainer where inflation & commodities are heading!!
* Equities cannot perform well in the days of high inflation (not me but history says so) & inflation around the world has jus started to rise.
* Let's say all this PHD economics central bankers wake up from their invinsible sleep & start to massively defalte thier currencies (which is wot the doctor is ordering but i dont think we can have an Mr. Volcker as of yet) wot happens then consumtion goes down the barrel! is that in ne way gud for Equities as an asset class? i dont think so.
* the total credit in the system is about 350% approx. which is at the highest in recoreded history & defenatly not a gud sign.

so woteve the central bankers do the fallacy of fiat currency has gone too much & the beginning of the end is here is jus how soon we realise it!

gold sud outperform every asset class for the next 5 to 10 yrs.

Kutty said...

Dear sir, seeing now ( 11.11.2012, AFTER 4 YEARS ,)the comments of KRUNAL , I WONDER AT HIS FARSIGHTEDNESS , ( NIFTY ALSO FELL BELOW 2500 BUT THEN IT SHOT TO 6000 LIKE A PHOENIX ). IN ANY CASE , HIS INSIGHT ABOUT GOLD IS REMARKABLE .