“Market is going up but Why my stocks are not moving up?”

Saturday, 22 November 2014

“Market is going up but Why my stocks are not moving up?”

Greetings from Hitesh! I often come across the above question from my clients as well as other normal investors.  My last two posts on “Our Prediction on Mr.Modi has come TRUE – 100% this time also!!” and “White Secret of Black Money – Why Mr.Narendra Modi is Giving Congress a Chance to Prove Him Feku?” have become the most read and appreciated. Thanks for your words of appreciations and your time in reading my post. I am really thankful to you all. Now let me deal with above concern.

There are three ways to look and understand the situation - one from Investor point / second from Market point and third from MACRO perspective. Let us look at the investor point of view first.

What a Normal Investor Wants?

If you also have the same question, let me deal with that in details. But let me deal with some quotes before that.

"You can tell whether a man is clever by his answers. You can tell whether a man is wise by his questions." Naguib Mahfouz

“Your Questions Decides Your Destiny”. Anthony Robbins.

Let us see the pair of questions and how it impacts your Investments….

1.    What is my goal for investment? V/s. How much return I can earn? :- First will lead you to assess your goals with the realty of the situations. You will take actions only when you are sure that you will achieve your goals. Stephen Covey in his master book… “7 Habits of Highly Effective People” calls this as an inside out phenomena. In second question, you will take actions based on some TIPS. If somebody promises a 100%, whether or not it is possible you will invest and lose ultimately. First leads to Strategy while in second you just succumb to greed. If you have formed your own strategy and following it religiously- you will never worry for market movement and movement of your stocks prices. Because you know that your strategy will give you the returns and not the market!! Look inside before you ask such questions.

1.  How Can I Profit From The Current Market ? V/s. Why Should I Invest In Current Market? : - First question will motivate you to take control of the situations and profit from it. You will look for opportunities. The second will lead to non action. In the first you will have positive bend of mind to look for opportunities while in second you will see the threats…mostly projected and you will miss the game. The first questions will force you to take a stand that will you be a trader or investor?

If you are trader – you will be happy trading with stop losses and if you are investor you will be more happy when market moves up and stocks do not – as you will get the opportunity to buy at lower levels in bull market!! READ this as many times as you can. This will help you clear your action plan!!

2.    What has happened in the past when market went down? V/s. Should I invest when market is going down? :- First question will give you the broader picture of the market. It will also make you realize that smart investors were buyers during all the falls and they made the best money when the market came up. Second questions will lead to fear and fear leads to non actions. No action, no money!!

3.    What are the rules of the investments? V/s. Why should I follow the rules? :-You play any game and you have rules…e.g the first and foremost rule to profit from investment is “Buy When Others Are Selling”. When you follow the rule, you are obeying Mr.Market and Mr.Maket will give you reach rewards for obeying him. When you ask the second one, you are not ready to follow the rules, you are not concerned with Mr.Market….so, Mr.Market will also have no concern for you!!

4. Why smart Investors are buying now? V/s. Why FIIs are selling now? From 1994, (when FIIs where allowed to invest in India) to till date, I have observed one unique trend…every time when market goes up….our domestic and institutional investors are sellers and every time when market goes down FII are selling and these guys are buying…have you seen LIC keeps on buying every time market falls? When you concentrate on the first, you will realize that they are following the basic rule…if you go with the second, you will have no rules to follow.

5.    How an Investment consultant can help me? V/s. Why should I appoint an Investment consultant? : - If you ask the first question, you will do your SWOT Analysis and go for right kind of consultant. Have you seen every big investors have their own consultants…Mr.Warren Buffett follows Mr.Munger, Mr.Rakesh follows Mr.Damani Sr.. Take any sport person…they all have their coaches!! When you ask the second question…you believe that you know everything or you are greedy to save on fees. In such a dynamic market it is not possible to know everything and with greed you can save few rupees but you can not earn big money !!

In short, you should be clear about your own ROLE. If you are investor – you should be happy that stocks are not moving up the way market is going up – it gives you the power to buy more and more stocks at steady prices!!

If you are trader – follow stops and trade. There is a statistics which says – you will hit stop in 4 trades out of every 10 trades you make. It’s a hit out or get out.

In both the above scenario – you have nothing to do with the market – you have lot many things to do with you and your way of thinking!! It’s your attitude my dear.

Now Let me DEAL the above questions from MARKET perspective:-

I have studied all the TEJI and MANDI since 1992.  Stocks which moved up in 1992 did not move in 1994, stocks which moved in 1994 did not move in 1997, stocks which moved in 1997 did not move in 1999, stocks which moved in 1999 did not move in 2004 to 2006!! 

Only 2007, was an odd year when there were all round teji in all the stocks and all the asset classes like Stocks/ Real estate/Gold/Silver!!

From 2009 till now – selected stocks and sectors are moving up. In fact, market is moving in CIRCLE. Today they move Reliance group, next day BANKS, next day FMCG and AUTO, and things like that.

The smart ones should pick up the shares which have not moved till now – as their turn will come tomorrow or day after!!

MACRO Perspective:-

If you look at the MACRO picture – Mr.Modi has become the PM, that is the only and only booster. The Inflation / interest rates / profitability / liquidity in the market / demand improvement / infrastructure improvement all these issues are still pending. There is no change at the ground levels – just expectations have soared.

Due to this VERY BIG investors have become traders and their movements are moving the market in Circular fashion. BIG INVESTORS are not in a mood to take chances with their money. This will continue till next budget is out and they get the clarity from Central Government about the on-going and speedy reform process.

What Next?

You will never find the most beautiful woman as most beautiful – till you are attracted toward her physically!! Same way you will never make tons of money in this market – till you are clear about your role in the market.

Just be clear – why are you in this market? If you can write down just 10 logical reasons – you will get to know your inner self. When you know yourself – you will lose all your questions and only action will remain.

Do not believe me- just do what I have said about and tell me the results.

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Hitesh Parikh