What’s our biggest enemy in the markets?
This one’s invariably…
Cut to ’07.
Fancy hotel banquet room, snacks and drinks, chief investment officer of JP Morgan is talking…
…and we’re listening.
My friend and I…
…sitting on profits…
…feeling smug about ourselves…
…ready to conquer the world…
…nothing can stop us now.
Or can it?
“There will always be a correction…”. These words catch my ear.
I raise my hand.
“Yes? The gentleman with the lime-green tie has a question?”
I stand up, and before I know it, I ask the deadly question.
“Don’t you think there’s been a paradigm-shift with regard to India, and that India has decoupled from the rest of the world?”
“How old are you, Sir?”
This was ’07, remember?
“I’m going to excuse your question, because you’re young, and have probably experienced the markets for…?”
“Exactly. That’s why I’ll only answer your question with a smile.”
“You see, globalization is a reality, and decoupling is a myth”.
“It’s fancy phrases like “paradigm-shift” that catch the inexperienced investor’s imagination, leading to huge market mistakes”.
In these few sentences, my entire comprehension of markets was blown up and thrown out the window.
And that would have been a good thing…
…had I listened.
Such is the arrogance of “youth”, that “youth” doesn’t listen.
Soon, the ’08 crash happened.
I lost big time.
Took me a long time to get back and stabilize.
I remember my stomach churning and my unwillingness to meet people as markets crashed to lower and lower levels.
I almost couldn’t take it.
We are our worst enemies.
What’s it going to be this market high?
We’ve learnt, and are positioned.
However, there will be newbies (like we were) who are going to go through this chain of events.
What buzz-words or phrases will catch their imagination?
Pending rally in small-caps?
There’s a new cocktail doing the rounds this time around.
This cocktail will ensnare.
Even the topmost analysts are beginning to feel that a correction could take some time coming.
Some weeks ago, most felt that a correction could happen anytime now.
Player psychology is set for the cocktail to do its work.
Then one needs a pinprick.
In ’08 this was perhaps Lehman on the world scale and the Reliance Power IPO in India.
What’s it going to be this time?
It doesn’t matter.
Remember? There will always be a correction.
Are you positioned?