Thursday, July 15, 2010

What if they are wrong?

In earlier posts today, I offered analysis by Dow Thoery Expert, Richard Russel who feels that we may be entering a bear market never seen before. He seems to be agreeing with Robert Prechter who is talking about Dow 400. (As I write, the  Dow is at 10280).

Now, experts have been known to be wrong. (including this writer who is not an expert, but still gets it wrong, many times).

Suppose the Market does not quite fall but remains within a trading range. Or, the Dow inches up every year, touching 20,000 in the next 10 years (That is about 7% annual compounded growth - quite good). Or, productivity with innovation brings about big growth in the USA and the Dow actually touches 30,000 by 2020, with the U.S. markets outperforming the BRICS.

Or, maybe th U.S. Markets actually fall to 7500 Dow where they develop a base and then start a new bull market. It is also possible that Mr Prechter ay be correct, but there is always the possibility that any analysis can go wrong.

My Point: No one knows the future. What we have in front of us is the trend. Depending on yout time profile (day, swing, position, investor), follow the trend.

6 comments:

Sunil Malhotra said...

What about contrarian approach for investors in this of market situation, instead of following the trend?

bkm said...

Sir,
"Now, experts have been known to be wrong. (including this writer who is not an expert, but still gets it wrong, many times)."
I like the reality you expose and accept the market trend gracefully.(most of the experts continue with their ideas and when they go wrong find some or other excuses , but don't accept the reality.)
One must understand that by studying the charts and trends some theory has been generated ,based on those inferences ,forecast has been made, which may or may not come true. But the experts , (I still accept you as an expert who has unbiased view) always have done the inference from years of experience and refining the forecast with new theories added.
It is a continuing process where output(forecast) can be modified by giving a feedback loop to the input (past chart).
The feedback loop are constraints like US PreMkt. , actual Mkt., europe Mkt. , asian Mkt., local constraints like political scenes, monsoon etc.
"My Point: No one knows the future. What we have in front of us is the trend. Depending on yout time profile (day, swing, position, investor), follow the trend."
The last three words say everything: FOLLOW THE TREND

men said...

Dear Mr. Sudarshan, in one of your previous posts you showed that ibm did nothing for around 10 yesrs, we are in a similar phase as far as most cash counters in the index are concerned, for eg RIL is moving from 1050-1080 most of the time, is it better to have a mechanical kind of setup for such stocks now or be in cash till such time that the range increases and we don't when it will come? Put in other words what is the risk of the nifty tanking big time now?

ANAS said...

Respected Sir,

Just dropped in to say(write) THANKS for your precious tme.

I have not gone through the site, but do so soon and let you knpow .

Thank You once again.

Anas Elias Batla.
98300-22702
Kolkata.

Krishna said...

Can Reliance Industries come to levels 500-525 ??

Should I put my money in RIL at current levels with the hopes that down side from here is almost capped ??

Or RIL can come down as low as 500-525 over a period of time and so looking at risk I should avoid this stock right now ?

If RIL breaks down to 500-525 then probably Nifty will also take a down trend till 2500-2550 in due course.

So what should be my strategy so that my WORKING CAPITAL remains protected and I can earn some profit also ?

Please note that I am talking about investing and not day to day trading and so I am more interested in broader future of the market & RIL.

Warm regards

Jazz said...

a small query. I am long at 5350 and now trail stop is bep... If mkt opens around 5300. And after 15 min orb goes up. Should i exit or hold???