Novice investors like you and me have the tendency to get carried away and to gloat about our success.
One can see this on twitter when every Tom, Dick and Harry is waxing eloquent about how his or her stock has notched up hefty gains. In fact, there appears to be a competition amongst the novice investors on who can gloat the most.
This display of exuberance and one-upmanship by novice investors has obviously got on the nerves of Prof Sanjay Bakshi, the authority on value investing.
The Prof dashed off a testy tweet quoting the immortal words of Warren Buffett:
“In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world. A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond.”
@Sanjay__Bakshi pic.twitter.com/vc8EEF7s49
— Sanjay Bakshi (@Sanjay__Bakshi) July 3, 2016
The Prof also gave the grim hint that stocks may be overvalued at present.
Midcaps vs. Largecaps… pic.twitter.com/VtJKBiVKon
— Sanjay Bakshi (@Sanjay__Bakshi) July 3, 2016
The Prof is not alone in cautioning novice investors. Vijay Kedia also sounded the alarm that there is trouble in the air because a number of junkyard stocks are coming back into fashion.
Be careful. #bhangaarcap started showing up again. pic.twitter.com/eCCdOnnLPO
— Vijay Kedia (@VijayKedia1) July 2, 2016
Sunil Damania, the editor of Business India, has also got jittery at the relentless surge in the markets. He cautioned that there may be a crash soon:
Whenever there has been record response to IPO, market has crashed soon. #QuessIPO recd record response. Is history going to repeat soon?
— sunil damania (@sunildamania) July 4, 2016
In my view, we ought to pay attention to the advice offered by the stalwarts and ensure that we invest only in top-quality stocks with a proven track record of performance. This way, even if the euphoria dries up and the markets crash, we can hope to recover our money sooner than later!
Good warning. The Nifty Midcap 100 is trading at 40 which is insane. I’ve been looking at my own portfolio to see if I can weed out any euphoria stocks, but it’s difficult to be sure. Sad thing is the good stocks will get hammered as well when the Midcap meltdown happens. Maybe you should put a post down on how to spot stocks that are just flying on the back of euphoria alone. PE doesn’t tell the whole story
Broadly i agree with him about the overvaluation. However, its wrong to generalize. because the large caps also include a lot of cyclicals an loss making psus. PE would be misleading. Its better to be stock specific.
Having said that, the same was the case last year around the same time. The prof didnt warn that time. Instead i remember seeing some intelligent fanatics story glorifying the ceos of some companies like kitex, vaibhav etc.
#Niveza #Review ::
The stock market has become bottom up stock picking at the moment rather than buying overall blue chips from NIFTY Index. Some of the stocks have become overvalued and they are moving ahead of fundamentals at the moment. So investors should rather go by stock by stock review its fundamentals and valuations and growth prospects rather than chasing the Index levels.
Source: http://goo.gl/qU5AyN
There is no risk till nifty crosses 9000 by December. Everyone is bullish on India and no major global event this year after Brexit. Just buy blindly till then
Same for PSU stocks which have run up a lot in recent times despite having NPAs – super NPA issues and next step of NPA recovery. Will this crash initiated by these PSUs?