Thursday, May 28, 2009

Day trading or Futues trading does not depend on consensus

Most analysts now believe that the Markets are going to remain steady, leading to higher levels. However, consensus is not always a sign of wisdom.

Quote from The Big Picture blog:

And for those of you who are fans of the wisdom of crowds, allow me to remind you how poorly the consensus of professionals did last year. As we discussed yesterday:
“Consensus? Why should investors — or homeowners, for that matter — care much about the opinion representing the consensus view? That consensus missed the credit bubble as it formed, wrongly believed the sub-prime issue were “contained,” and utterly missed the top in housing. If you followed the consensus, you lost 50% of your money last year, saw your home value drop 30%, and generally got mangled in most asset classes other than Bonds, Cash and Gold."

Most people feel left out from the rally. Any number of people now say "the market has shown that it will go up every day. So, we should now buy without waiting for a dip". This is dangerous thinking that emerges at the top of the rally. "The Market cannot go down now" -this theory has been proved wrong when we had the bear market immediately after the 2003 - 2007 bull market.

My point is: investors should always wait for dips to buy. These dips come, that is for sure, it is our patience that gets exhausted quickly, leading us to buy almost at the top.

7 comments:

Krishna said...

Dear Sir

What are SEBI norms to qualify as a professional Technical Analyst?

Which certification/qualification is legally required to take technical analysis as a profession ?

Has SEBI or any other regulatory body issued any clear cut norms in this regard..?

Please Guide & oblize.
regards

STOCKJOCKY said...

One should take trading at art of making smart money and to learn this art some study or practice is required which is availble through many association or experts also, my point is that to buy simple outfits or Rs. 1000 or more we take some priliminary study so here in trading we are investing lakhs of rupees, should not we spend some rupees in study also

men said...

Hi,
What you are saying in other words is buy low and sell high, sounds so easy, but EQUALLY hard to implement.
Say we touch 4600 and then a dip comes to 4300 would you say buy into that? Would that be better off or buying now and taking the risk of seeing it come to 4080 and then rebounding from there, that is what makes us look at people like you. Please give us levels to work with, on cnbc you said "3500 IS NOT IMPOSSIBLE and SO IS 4500 some days back the market can do what it wants to" So please give us levels for entry on dips and exit on rallies, rather than wait for a dip.
Also a number of questions raised on how and why these are arrived at i.e. some guidance on how do we go about it has been left UNANSWERED from your end, while questions asked in lighter sense has got a prompt reply why?
HOPE YOU WILL NOT DELETE THIS POST.

Manu said...

Sudarshan Sir,

there are many technical analyst Service provider, one of them is Snpnifty.com, which is linked to sudarshanonline.com, should i subscribe, asking because there are many negative blogs of Snpnifty.com on internet.

SWEETY said...

Absolutely true sir. I agree with you entirely.

Now, in June we may see the real bull consolidation. For that the bears has to help the bulls by hammering down the prices "AT-LEAST" by 20% from the present level. Some of the serious investors looking for investment opportunities around 3000 level. I recollect an article in ET which says about Rs.20,000 crores are lying with MF waiting to be deployed in equities. This is tips of the ice berg. We may see some huge FDI, as every one is convinced by India story of growth and stability.

It is 100% true most of the serious players really missed out this bull jump. Neither they are interested in buying at this price. To my understanding, there is huge build up of Shorts during last few days in June series. Heavy distribution on cash segment.

So, I donot surprise if there is a correction to the extent of 1500 points in nifty from the current level.

Regards

CHANDU said...

People who visit ur blog are not looking for ur calls or tips.they are ur followers.The way ur supporting us,no analyst can do that .we SALUTE to ur down to earth personality.SUDARSHAN Ji,you rock.

God bless u
chandu

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Regards