Posts tagged with "market"
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Should You Prepay If You Are Nearing The End Of Loan Period
I recently wrote a post on whether one should prepay loan or invest if you have extra savings lying around. A reader commented that a friend had a different opinion about prepaying loan when she is already at the end of the loan period. Here is the comment again for your reference – “Not used to loans, but different view from my friend. She had availed personal loan for 4 years (if I’m correct) and was in 3rd year when she received a good bonus that she can close her loan but instead she didn’t. When asked she said as part of EMI she had paid all interest and what she is paying is her principal and very minute interest so she said it’s unworthy to repay the loan. She had a point there”. While she is correct in that, one is paying more of the principal than interest towards the end of a loan period, the benefits of prepaying still remain.
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Is The Stock Market Peaking?
I am a little bit concerned. The stock market has been giving great returns for the past 3 years or so. Since the COVID-19 pandemic there has never been a long drawn bear market scenario. How long can this continue? On top of it, I see more and more people getting involved in trading. Some are even quitting their jobs to do trading full time. Generally, when there is euphoria in the market, you see these kind of events happening. New traders, who think they are investors and think they have the know how, enter the stock market just as the market starts peaking. Then, armed with a bunch of algorithms based on back testing, start to do algo trading. When you see more and more of these people, you know the time has come for the market to crash.
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The Markets Of 2023
The year 2023 is behind us, and this year was definitely less eventful than the past 3 years. Since COVID hit, things have changed quite a bit. It all started with the virus of course that wreaked havoc all over the world at the same time. There were a lot of side effects. Many lost loved ones, we were restricted to home isolation and lock downs were introduced. For the first time ever, we had everything closed including schools. Only the emergency services were running. The new work from home culture started. Then came pumping money in the fear and anticipation of reduced spending. The free flow of money caused inflation because people now had more money but nowhere to spend. Remember, everything was closed, so you could spend on nothing but food and health. Then came interest rate hikes to control the inflation. What a crazy ride.
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A Confusing Time In Stock Market
The Indian stock market has been unrelenting in its growth. It feels like yesterday when I wrote that Sensex crossed the 60,000 milestone. Now, just 2 years later it is about to cross 70,000. But there is nothing impressive about it because that is a relatively low growth rate of 8%. Hardly anything to write about since we expect markets to do at least double digit growth. What is really impressive is that the market doubled in just three and a half years, which is a solid 22% growth. In June 2020, Sensex was around 35,000. The long term Sensex returns are around 13-14%. So should we be worried about a market crash?
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What Type Of An Investor Are You?
Sensex is where it was some 7 months ago. We have escalating war on one side and growing inflation on the other side as no nation is immune to the ill effects of loose monetary policy and facing the after effects of stringent COVID restrictions. Sri Lanka is defaulting on its external debt. A nation default on its debt obligation is such a bad news. None of these are good signs and yet the stock market is happily moving forward. What should an investor to do in this situation? The answer may not be quite as exciting as one would think. It is quite boring and you probably already know what I am going to say. Just stay the course, follow your goals, maintain your asset allocation blah blah.
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The Market Scare
There is a lot of talk about how markets are crumbling all over the world. I have no idea what they are talking about. We barely corrected 10% from the peak if you take Sensex into account. That is a normal drop one would expect from the markets in any given year. I don’t understand what the excitement is all about. A 10% drop is peanuts in my opinion. But more importantly why would one look at the drop from the recent peak? Isn’t investing in equity all about the long term view? What happened then? These very same people don’t seem to be too concerned when the markets were moving up by 20-30% in a short duration. All this confuses me quite a bit.
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Follow-up to Virtual Meetup #8
Thank you to everyone who joined the virtual meetup #8. Again a very low turn-up but we had some interesting discussions. This is a follow up to that meeting where I paraphrase and summarize what happened in the meet-up. I will not cover all the topics. Just the ones I felt that might help the readers or if I felt that I needed to add more clarity to my responses.
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Difficulties Of Predicting The Stock Market
Every time we talk about the stock market, we either say it is overvalued or undervalued or fairly valued. The valuation may depend on many macro economic factors. One of them is GDP. Normally one would expect market value to be inline with GDP. So if GDP is up, market cap will be up, which basically means stock market is up. However, that is rarely true. Either the market is running ahead of GDP or the GDP is ahead of the market. And the worst part is that it is extremely difficult to predict when the trends will reverse.
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Stock Market Is Down, I Mean Up
Just three days ago I was planning to write a post on how Sensex dropped 1190 points. In fact it went down as much as 1879 points at the lowest point in the day. But then I thought, what is the point of writing the post. It will be back up again the next day. Which is precisely what happened for the next 3 days. The stock market was moving up without a break. This has been pretty much how things were for the past several months now. One or two days the market might fall on some random news. Then it will continue on its upwards march for several days. There is absolutely no need to worry about any fall it seems.
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Sensex Touched 60,000. What Should I Do Now?
I never imagined that BSE Sensex (Bombay Stock Exchange Sensitive Index) would touch 60,000 so soon! Especially given the uncertainty due to COVID-19 pandemic. It took just 8 months to go from 50,000 to 60,000. Which is a 20% gain in that short duration. We have all heard of stock markets giving great returns, but this one is special because it is happening at a time when economic situation isn’t that great and we are still fighting a virus without cure. Oh well. Markets will do what they do best – surprise everyone. So what should an investor do in such a situation? My response may not give the answers you are looking for, but that doesn’t stop me from writing now will it?
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