World Markets are in bull trend now and it will remain bullish for another 5 years

After a big crash in 2008, Stock Markets recovered world over. But after that correction, it rallied and has been in sideways trend since then. For the past 2 to 3 years, it started picking momentum. Now the present rally seems to be clear secular bull market. After Donald Trump took over Presidency in USA, the US markets Dow Jones Industrial Average, and Nasdaq started moving up and Dow is making new highs since then. In India, After Narendra Modi took over as Prime Minister of India, Indian Indices started moving up.

Gold started moving down as Gold will be in bear market once the stock market is in bull trend. The fundamentals are good. European Economies are picking up from the recession. And their indices are also started moving up. India's Nifty is trading around 10000. Dow jones is trading around 22700.Japanese Nikkei after testing a low of 7000, it is now trading around 21000.Investors should keep confidence in the bull market and start investing for another 5 to 10 years.

Timing of implementation of GST

Government demonetisation of 95 percent of notes in circulation on 8 November 2016 has already damaged the white economy in the short term though it is good for the economy in the long term. The pain is felt across the Nation and it is felt across the all sectors of the economy. Common man who could not understand pros and cons of demonetisation, is already feeling the pain.

Demonetisation is a big exercise and involves all the people of the country and it is a painful one. It will take some time to recover from the pain. Bring India GST is also a big exercise. It also involves pain for people across the Nation. So the gap between Demonetisation and GST implementaion should at-least be 2 years. Implementation of it within 6 months have aggravated the pain of the common man though both are good for the economy in the long term

Demonetisation is really good or bad for the Indian Economy?

When we start an Economy fresh after demonetisation, many unaccountable money will get into the system. Unaccountable money will be accounted and tax income would increase. Counterfeit Money circulation in the system would be eliminated for a reasonable period of time. Fear of frequent recalling currency will surely dampen the Counterfeiters. It will push the country towards cashless economy. Going cashless means a good while economy and a reliable economy. Planning for the government is easy as everything comes under white economy.

The negative side is, immediately it will impact the real economy. It has already damaged the real and black Economy already. And also the cost involved and pain of the people are short term negatives of demonetisation.

Demonetisation is good for the economy in the long term but surely bad for the short term.

Food processing sector is good in the long term

Solving spoilage of foods is the basis of Food processing industry. Billions of money is wasted yearly by the spoilage of foods. Proper processing of this food would save billions of money. Processing of food started since the industrial revolution in Europe. Beer was processed using canning technology. And the the most challenging process of milk sterilization took place in early 1900. Then started fruit juices and sauces. Tetra Pak was the pioneers in this field with the invention of Tetrapak Technology. Now it is a global leader in this field. European countries like Sweden, Italy, France etc are forerunners and market leaders in Food Technology.

New innovations are brought and new technologies are brought inside this food processing to keep the food sterile and self stable for six months to twelve months. More and more foods are coming under food processing and the technology is improving to give no side effects processed foods. Food processing industry is likely to grow in coming years and advanced technologies will be brought into this field.

Why are most of Traders in Stock Market making losses?

If you are an investor for long term in stock market, then it is a matter of time, which will decide the profit of your investments. But when it comes to trading, it is the matter of cutting your losses quickly which decides the profit of your trading.

 Investing and Trading are both different ball game in Stock Markets. Stocks Markets are always bullish in the long run. So any Investor will get his chance of making profit in the Market. But for Traders, odds are always against the trader. First he has to make a right entry, and then he has to make a right exit. The odds will not be in favour him to make a right entry.

Against this odds, if he makes a right entry, then he has to make a right exit. Even after seeing a good profit in paper, if he doesn't book profit at the right time, his trade may still end up in loss. But if he uses a proper trailing stoploss, he ends up in a small profit or a big profit. But in case of loss, he needs to be careful. If he doesn't cut his loss quickly, he will end up in loss, if not he will end up losing his capital.

 So cutting losses quickly is the key to your success in trading. So enter the trade with a clear cut stop.

Will there be a boom in Indian Economy?

Economic growth cannot be kick started in single decision or by strong government alone. It is a collection of decisions towards the growth taken at the right time. Building or breaking an Economy may take long time. The base for economic growth, we saw in India from 2003 to 2008, was established by Narasimharao government and Vajpayee government. The base was made for more than ten years for the 2003 – 2008 growth.

UPA-1 and UPA-2 reaped the benefits of this base. Now, the economy is contracting. After an expansion, the contraction phase will follow. This contraction phase will surely take its time and its course. In this period, a strong government can only reduce the impact a little bit.

Sharing the Financial Knowledge

If an experienced person who is well versed with all investment ideas, share his financial knowledge with his colleagues, friends, and relatives, then it would be useful to them. Many doesn't aware of different financial situations in the current world. Whenever they are forced to undergo a particular tight financial situations, they get the experience. For example, if a person doesn't have a Medi-claim insurance policy, he will realize its importance only when he has spend lot of money on Medical expenses. Likewise, if a person has kids and if he doesn't save for them in the young age for their higher studies, he will put him in a financial hardship, when he prepares their children for the higher studies.

Like wise, If you don't invest in stock market or Mutual funds even when the market is dull or in bear trend, you will loose a money making opportunity in a bull market. If a experienced person, who is exposed to all investment tools, advises one person regarding these investments, it will useful for the listener. The listener is not needed to undergo a financial tight spot, if he takes lesson from the experienced person. So, young people, who start earning should talk to experienced persons to get an idea about investments for the future.

Will the growth story of China and India continue?

The Asian tigers China and India grown in the past five years more than 7 percent in GDP. It was said they are going to rule the financial world for another 20 years. But post 2008, the GDPs of these countries started climbing down and for the financial year 2012-2013, both the countries have lowered their growth. If this happens for the next three years, then their growth would as equal as other countries. Will this growth would continue.

From Stock market's perspective, China's Shanghai share index never reached the 2008 high ever after 4 years. In fact, China Index has under performed for the past 4 years when compared to other world indices. For Indian Stock Index, it has come close to 2008 high, but it has not crossed it. In 2011, it has seen a decline from the top.  

For a Economy to grow, the Stock Indices should grow. If it fails to do so, then the Economy would shrink. The GDP growth would not continue. Going by these, it seems, both countries are unlikely to have growth of more 7 percent in coming years.

Will European debt problem once again bring down the Markets?

In August 2011, all the world stock indices declined heavily and it was said that the Europeon debt crisis was the reason for the fall. But from november most of indices rallied and some index even made a new all time high.

Is the crisis over?  Are the fundamentals of the other Economies are stronger to warrant a rally? The answer is no. The Europeon debt crisis is not over. It is discounted by the market in the short term. But it is not over. It will once taunt the market.

The markets are likely to cut the last six months low in coming months. The recent rally is really a bear market rally. It is likely to be followed by big decline in another three to four months.

Are really Markets react because of Fundamental News?

There will be always good and bad news flowing in the markets. Media always highlight the news if there is any rally or correction in the market. Does really market react for these bad or good news.  when there is a correction in the market, the correction is being attributed to the bad news at that time.

But if we could see other news that came on that day, you could come to know that there were good news at that time also. But the media completely ignore the good news and highlight the bad news as the action in the market is down.

 

Likewise, when there is a big rally in the market, it is being attributed to the good news that is coming at that time. But if we check the other news, we could see some bad news also. But the media would highlight the good news, because, the market is up at that time.

When Tsunami came to the shores of most of the Asian countries, and took the lives of more than 3 lakh people, the Indian Stock Market rose substantially on that day. Normally, Market should have come down on that day for the bad news. But it actually rose.

This shows that market never care for the fundamental news. It is always taking its own technical course, irrespective of good or bad news.

Likely Behaviour of Automobile Sector in 2011

The Automobile sector grown at 25% in 2010 in India. It is one of the sector which performed well during 2010 along with Pharma and Banking sector. This year also it can grow as it grown last year.

The main strength of the sector is, it can grow when the economy is in growth path. The growth of this sector depends upon industrial growth and growing upper middle class people in India.

If the Economic growth of India continues as it is growing now in 2011 also, then we can expect the middle class to grow. If the income of this group increases, those people having two wheelers will buy cars. The recent incident of  buying of 150 luxury cars costing around 40 lakhs in Gujarat is an example of the potential of this sector.

But it also have some drawbacks. If stock market and economy in doldrums then this sector is likely to see a negative growth. Comparing to Auto companies which manufacture HMVs, LMVs, the companies which manufacture two wheelers and cars can grow in 2011.

Will Fundamental Analysis of Stocks work for forecasting its share price?

There are many opinions on analyzing stocks. The tools of analyzing a stock price is fundamental analysis and Technical Analysis. These two tools are different forms of analysis. One doesn’t depend on other.

Some people say, Technical Analysis is the best method to forecast the share price but some say fundamental analysis is the best way. Let us discuss the pros and cons of these two methods.

Technical analysis is done based on historical price movement of the Stock. This price is the ultimate result of the demand and supply. No individual can alter the demand and supply on his own. So, the price will always reveal the real value of that particular stock at that particular time. Any expert on Technical analysis can some what predict the stock market.

In case of Fundamental analysis, the data cannot be reliable as it can be subject to manipulation. The previous years performance can not be repeated this year also. A good growth projected based on demand and supply of its products cannot be also reliable. Even if it happens as per the projections, it need not be reflected in the share price.

We have seen many quality stocks haven’t moved inspite of bull market in other stocks and we have seen many fundamentally worst performing stocks moving up. The inference is, fundamental analysis doesn’t the have the edge to project the future prices.

How should be the model portfolio ?

An investment portfolio is the portfolio of investments made in Shares, Gold, Real Estate, Bonds, Deposits. One should know how should be this portfolio. Which one should have more exposure and which should have less exposure.

First, we shall take investments in shares. Shares are always high risk, high potential investments. They are mostly bullish in the long term. But in the intermediate period, they are bullish at a time and they are bearish at a time. So investments in shares should be made for more than 10 years.

Secondly Gold is always the preferred investment for middle class people. It can be easily liquidated. It also has bullish and bearish cycle. But the bull and bear cycle would be shallow in depth when compared to Stocks.

Thirdly, It is Real Estate. But recently, the myth about real estate that it will be always bullish is tarnished. The 2008 bear market is due to the burst of real estate bubble. But in the long run it will be always bullish.

Fourthly, it is investments in Bonds and Deposits. Surely, it is the most safe investment. But it is the least attractive investments in terms of returns.
Definitely the age plays a crucial role in the Investment portfolio. A model portfolio should have all the investments but the ration should be derived based on one’s age.  A young person should have more exposure to stocks and a aged person should have more exposure to deposits.

How will be the year 2011 for the Stock Markets and Gold ?

The year 2008 saw the steepest correction and the year 2009 saw the fastest rally and 2010 saw a minor rally in terms of percentage appreciation. Gold has been in bull run since 2003 and it is making all time highs every month. Now gold is trading near 1400 USD.

Now the million dollar question is, will the bull run in Stocks and Gold continue in 2011 ? For the first time in history, Gold and Stocks are in bull run simultaneously which has puzzled many  market pundits regarding the validity of the long believed theory the stocks and gold would always in different direction. Meaning gold will be bullish if the stocks are bearish, and Gold will be bearish if stocks are bullish.

The behavior of any market is cyclical. A bull market will be followed by a bear market and a bear market will be followed by a bull market. And also the magnitude of the bull market will depends upon the magnitude of the bear market and vice versa. Likewise, a multiyear bull market will be followed by a multiyear bear market and vice versa.

Considering this fact, the present bull market in stocks and Gold was started around 2003 and they have been in bull market for the past 7 years, the magnitude of the next bear market is also going to be a big one engulfing many years. The present bull run in the stocks and gold is likely to top out near 2011. So we can expect a top from this year.

Are Gold and Stocks moving in opposite direction always?

Historically, Gold and Silver is moving against the direction of Stock Market.  Around 1929 when US was in recession, the Stock Markets have seen a big correction. The Dow which was trading around 380 levels came crashing to 40 with in a span of 40.

The Big correction is followed by 15 years of consolidation. At that period, Gold was started moving up. As Investors find Gold and Silver as safe investments, they started investing in gold at that time.

When ever Stock Market crashes, pessimism  prevails everywhere. The pessimism towards Stock Market drives the investors to a safe investment avenue. This is why historically Gold rallies when there is a bear market.

But the recent trend is Gold shows this trend is not applicable now. Since 2003, Gold and Silver are moving up. At the same time Stocks are also moving up. The price pattern in charts of stocks resembles the price pattern of Gold and silver. How long they are going to move simultaneously, we have to wait and see.

Sectors for next Bull Market

IT and Technology Sectors were in bull market from 1996 to 2000. Since then they are in a bear market for the past ten years. Nasdaq has failed to move above its 2000 high for the past 10 years. So this sector cannot lead the next bull run.

Reality, Infrastruture and Power sector led the recent rally from 2006 to 2008. So this sector is unlikely to lead the next bull market. Normally, a sector which saw a bull market is likely to be in a bear market for atleast for another 10 years.

Banking and Pharma sectors have been already in bull market since 2008 . so this sector is unlikely to see a bull market in the next bull market.


FMCG and Sugar sectors are in sideways market for the past 4 years and it has seen a bull market in the last 10 years. So these sectors are likely to lead a bull market in coming years. 

How to invest for the long term in the stock markets ?

The stock market is always cyclical. It will never be idle for some. Because markets are there because of demand and supply and this demand and supply is due to perception of the market by different people with different views.

Since the supply and demand is created by the emotions of the investors, it never going to idle. It will move up or move down constantly. These movements can be seen in long term, medium term and short term. Long term can be considered as a period above 1 year. Medium term can be considered as 6 months to 12 months. Short term can be considered from 1 month to 6 months.


Since stock markets are cyclical, the ups and downs are seen in all time frames. A long term investor has to hold his investments for more than one year. Some think long term investments are investments which you should not sell, even if you see good profits.

But term investments should be made when the markets are low and long term investments should be sold when it is high. No need to hold it continuously without booking profit.

What is the basis of Technical analysis ?

Technical analysis is the study of historical price movement of the stock. Study of this charts show, the price movement is always patterned. Almost all patterns are repetitive in nature. This is the basis of Technical Analysis. The repetitive nature of the patterns helps an analyst to forecast the future price movement of the Stock.

Even though this is the basis of the Technical Analysis, analysis is also based on the momentum of the Market. In Stocks, as long as a stock is momentum, the trend is likely to continue. Once the momentum comes down, it foretells a trend reversal. Many of the Technical Indicators are based on this concept.


Another popular method of Technical Analysis is Elliott Wave theory. The basis of this theory is on the assumption that the movement of the stocks are fractal in nature. Fractals are patterns which when dissected turn it to be a same pattern as the original pattern.

Apart from these concepts, there are other type of analysis based on their own assumptions.

Long term Technical Outlook of Silver

Silver was trading between 4 USD and 9 USD since 1984 before moving past the 9 USD in 2004. After breaking that level, it started to rally and made an all time high around 29 USD.

The present technical setup suggests that it is in a long term expanding triangle since 2004 and the present leg seems to be the last leg of this bull market. Earlier the upside legs are formed in 2006 and 2008.

Since, the first two legs seems to be alike and have same magnitude. So the final leg, which we are seeing now till 2010 is a extended one. Extensions happen when two legs tend have same characteristics.


For Gold none of the legs are extended. so, the rally is gold is clearly periodic and it is smooth. But for silver the final leg is extended, so it is seeing a big rally in 2010.


Since the present rally is in course since 2004, so far it has been in bull orbit for the past 6 years. This implies it is likely to followed by 6 years of bear market. Since the present rally is its final leg, silver is most likely to top in 2011.

The points a Stock Traders should take note of before trading

Success in investment and trading depends upon the trader's money management and sticking to decisions. Money management is nothing but protecting one's capital even if it turns out to be losing trade.

Always start small. Start trading with a small capital. Then slowly one can increase the trading capital.

Be aware that one is trading in the stocks for making money not for enjoying the trade.

Always risk the money that you can afford to loose. Most of the traders get wiped out of the trading due this only.

Always trade with a plan. Plan your entry, exit and stoploss very clearly before you initiate the trade. And dont trade the plan after the entry.

The trader you can keep his emotion like greed and fear under his control can succeed in trading.