Fairval

Notes on Indian equities, sectors and economy

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Predicting markets is a difficult game..

Posted by fairval on September 24, 2010

The comment (by Praveen) on the post about Ramesh Damani allows us the show how difficult it is to make predictions about the markets.

Here are some excerpts from what Mr Damani said in Mar 09 (thanks Praveen, reproducing a bit of it here)..

  • Bear markets are very painful, and the market will eventually break the 8,000 barrier.  (they did not, but Mr Damani was not alone in saying this, everyone was saying this at that point)
  • When I am talking about a new bull market beginning, we have to take out 21,000 to take that seriously. And, that might not happen for another five years, to be optimistic, because that is just the kind of pain that the markets inflict. There will be a whole generation of people who will forget about investing will have to get to that kind of sentiment level.
  • Hence, it is wishful thinking to think that the market can go back to 21,000 in one or two years. I would read that as a very small probability of that happening.

Some good calls too..

  • The only commodity I am actually really bullish upon is gold. I think it will be a big gainer based on the global economic environment. (this point came true)
  • At some price the bottom of this bear market Jet was at Rs 120 so implied marketcap of about 800 crore which is ridiculous for an airline running 20 years in India. I own a small amount of Jet for disclosure purposes, so I would buy that. (this has done very well too).
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