Friday, October 10, 2008

Markets Crash WorldWide

As India wakes up to start a new day of trading, markets have crashed world over. The Dow closed at 8579, down 678. The Nikkei is down 974 points at 8183.


1. Volatility will be extremely high. Do not trade. Wise traders stay away in such situations.
2. Do NOT try to catch falling knives.
3. Cash is King. Remember, a fool and his money are soon parted.


Anuj said...

I can see panic in Sudarshan's ink...everything is in BOLD!!!

Vinay said...

Hello sir!
I am neither trader, nor yet serious investor in equity market. But as i am following things over last year or so, i really appreciate the way you (Mr. S Sukhani) put your analysis. If it is only one person to believe blindly to go about in the is you. Dr vvc.

Shashank Jogi said...

Nassim Nicholas Taleb, in his book "The Black Swan" has coined the term 'Black Swan'. These are highly improbable events that have a huge impact to the world. The world seems to be witnessing one such black swan event in the financial markets.

Black Swan events are inherently unpredictable and almost everyone misses them.

Fundamental analysts keep talking about value, but do not take into consideration the possiblities of major shifts in investing landscapes. So when such events do occur, they are caught napping with huge losses in their portfolios, sometimes so much that it takes many years to simply recover losses. This has happened in the past and perhaps will continue to happen in the future.

One way out is to have a clear strategy to avoid large downsides such as the current one. Technical analysis can clearly help in doing this. So even if someone follows fundamentals, the use of technical analysis should not be eschewed.

As Sudarshan has commented, NEVER try to catch falling knives. It only leads to bleeding hands.

Cash has been king since March 2008 when it was clear that we had entered a bear market. OF course, no one anticipated the severity of the bear market.

A fool and his money might already have been parted!

s.k said...

Dear Sir
It seems s panick rally is in the offing taking Nifty to 3600-3750.Let the King(cash) play the same.All negatives are in place.Nothing more at least in Indian context