For those who are worried about the volatility in the market here is some info that might help you. India, or should I say Asia looks towards US data to value their own market(s). US on the other hand is looking at data that is coming from Europe, which does not look optimistic to say the least. Now that we are clear on the cause and effect relationship from different parts of the world, its apt for you to know how traders are putting their own biases on market valuations.
The most important aspect for any investor is to look at the bottom line of the specific company that they are investing into. The way you would do that is to see who is in the management of the firm, and their past performance; who are their customers and where those customers are located on a global scale; how are those customers performing in their respective nations/regions. You can obviously dive deeper into your own analysis based on your requirements - I have only mentioned some pointers.
Now, what some traders are doing is that they are hedging their positions by using synthetic "instruments" to make money both ways - market up or market down. However, this will also cause them to put a cap on their potential profit. On the other hand, what some traders are doing is that they acting like a novice investor where they are selling based on news from different parts of the world and are therefore making bearish speculations. One example is traders selling US treasuries because the Japanese are not going to announce sale of Yen before they actually put it out in the market to keep the element of "surprise", which is the only factor that makes a market to spring and act like a cat on fire.
One of the ways of making sense of this all, is to buy and hold. Buying and selling or just selling your current holding could give your portfolio unwanted losses. Its best to keep your investments simple. The more your complicate your view, the more foggy the results will seem pushing you to make decisions that may not be in your best interests.
Now that the basic theory is out lets talk fundamentals. US markets, may that be S&P 500, NASDAQ or Dow Jones are expecting a negative day tomorrow, because of the excessive fog that is set in the minds of investors. But very few of us are looking through a wider lens, which is that 76% of S&P 500 stocks beat analysts' expectations in Q2. All sectors have grown and the P/E ratios look very attractive for most stocks. That means that fundamentals of the companies themselves have not diminished, only some of our mind sets have.
As for Indian companies that do regular business with these American firms, as far as profit is concerned, it is safe to say that they will get paid for their services/products. The only cause of concern would be the exchange rate which you can look at at your own. So selling a stock of a company just because the market is going down could be the wrong decision.
What's the point of all this? Don't sell just because others are, in fact see if it is a buying opportunity. Make rational decisions not impulsive ones. Most importantly, don't get emotional about the stock(s), it is not your baby, it is for your baby!
The most important aspect for any investor is to look at the bottom line of the specific company that they are investing into. The way you would do that is to see who is in the management of the firm, and their past performance; who are their customers and where those customers are located on a global scale; how are those customers performing in their respective nations/regions. You can obviously dive deeper into your own analysis based on your requirements - I have only mentioned some pointers.
Now, what some traders are doing is that they are hedging their positions by using synthetic "instruments" to make money both ways - market up or market down. However, this will also cause them to put a cap on their potential profit. On the other hand, what some traders are doing is that they acting like a novice investor where they are selling based on news from different parts of the world and are therefore making bearish speculations. One example is traders selling US treasuries because the Japanese are not going to announce sale of Yen before they actually put it out in the market to keep the element of "surprise", which is the only factor that makes a market to spring and act like a cat on fire.
One of the ways of making sense of this all, is to buy and hold. Buying and selling or just selling your current holding could give your portfolio unwanted losses. Its best to keep your investments simple. The more your complicate your view, the more foggy the results will seem pushing you to make decisions that may not be in your best interests.
Now that the basic theory is out lets talk fundamentals. US markets, may that be S&P 500, NASDAQ or Dow Jones are expecting a negative day tomorrow, because of the excessive fog that is set in the minds of investors. But very few of us are looking through a wider lens, which is that 76% of S&P 500 stocks beat analysts' expectations in Q2. All sectors have grown and the P/E ratios look very attractive for most stocks. That means that fundamentals of the companies themselves have not diminished, only some of our mind sets have.
As for Indian companies that do regular business with these American firms, as far as profit is concerned, it is safe to say that they will get paid for their services/products. The only cause of concern would be the exchange rate which you can look at at your own. So selling a stock of a company just because the market is going down could be the wrong decision.
What's the point of all this? Don't sell just because others are, in fact see if it is a buying opportunity. Make rational decisions not impulsive ones. Most importantly, don't get emotional about the stock(s), it is not your baby, it is for your baby!
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