In 1958, Warren Buffet wrote -
A friend who runs a medium-sized investment trust recently wrote: “The mercurial temperament characteristic of the American people, produced a major transformation in 1958 and ‘exuberant’ would be the proper word for the stock market, at least”.
I think this summarizes the change in psychology dominating the stock market in 1958 at both the amateur and professional levels. During the past year; almost any reason has been seized upon to justify “Investing” in the market. There are undoubtedly more mercurially-tempered people in the stock market now than for a good many years and the duration of their stay will be limited to how long they think profits can be made quickly and effortlessly. While it is impossible to determine how long they will continue to add numbers to their ranks and thereby stimulate rising prices, I believe it is valid to say that the longer their visit, the greater the reaction from it.
Are we in a similar pahse in India ?
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2 comments:
Hi Vishal,
What do you think? From the tone of your blog, i think you feel that we are in that phase. I tend to agree with you. However, with a major caveat - the market still is not in a major bubble. The valuations are not too stretched - though we are getting there.
Regards,
Prasanth
Really can't predict the market... but days of easy gains are certainly over...Current Sensex P/E of 20 assumes continued earning growth of 20%+ while atleast maintaining current ROE levels with not much interest rate hike...and all these under normal environmental conditions i.e. no major shocks !!! With so many assumptions...
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