The current volatility in the market is creating unfounded panic but at the same time it holds the dangers for others to start loading up recklessly. We explore the current market turbulence in the light of age old wisdom from Buffett and Klarman.
“I don’t know and I don’t care!”
This was my response to a friend who called me last week asking how much more markets could fall. This fellow is a VP in a stock broking company, and was seemingly trying to check on my prediction of the next market move, and how far or close it was to his own prediction.
“Why do you guys make a fool out of people by constantly making horrific predictions?” I asked him.
“What do you mean by horrific predictions? We also make some brilliant ones,” he replied. I laughed out loud and shared with him some brilliant predictions I had recently come across, made by one of his clan –
Nobody Knows
After the crash in 2008 people would ask me, “Well, what are you doing differently now? What are you doing now?” And my answer was, “Well, it’s the same thing I’ve always been doing. I’m looking for cheap stocks.”
It doesn’t really change whether the stock market is rising or it is falling. You would always want to look out for stocks selling at discounts to their intrinsic values, isn’t it? So that activity doesn’t change.
It’s not based on what the US Federal Reserve or India’s RBI is going to do; it’s not based on what China or Brazil is going to do. It’s the same activity throughout market cycles.
But most people I see in the stock market are made nervous by volatility, especially when stock prices are fast on their way down. The Indian market, as represented by the BSE-Sensex has been falling since February 2015, but the fall has been gradual and with some intermittent rises. The reason people have gotten extremely worried now (starting late-August) is simply given the magnitude of fall.
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