Chasing and Paying for Future Expectations – Fallacy or Conundrum ?

NIFTY and SENSEX have been scaling heights in recent months – that is true only if you look back last 6 months, or  12 months, or 24 months.  But when you look back 2 years or 3 years, one would say, it is not a correct statement. In this context, the correct statement would be to say NIFTY and SENSEX are at same levels. You see how putting context or changing data set changes observations and conclusions. The point being, as an investor you have to learn how to “make an objective decision”. You have to learn how to “avoid making subjective decisions”. The current state of equity markets and economy provides a very good example of how to we make subjective decisions.

In last month or so, I have had an opportunity to interact with few folks on email. Many of these folks very interested to know whether it is time to sell any stocks in my portfolio e.g. ONGC, Reliance Capital, HDFC Bank, ABB, etc. Many of them wanted to check if it is time to book some profits. And few folks made a comment that Reliance Capital, NTPC, and ABCIL are not fundamentally strong for buy and hold portfolio. Continue reading rest of this article…