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Market advise, pinch of salt


Toughiee has a very interesting post on the Futility of Market Forecasters. He has taken to task Gautam Shah of JMMS, who forecast a major fall when the Sensex was at 12,300 recently, and on March 28,2007, he predicted that tech stocks would lose 12-15% in three weeks.

The rest is history. Not only was 12,300 the temporary low of the market over the last two months, tech stocks have rallied comprehensively over the last month! If this particular analyst had put money where his mouth was, he would be a much poorer analyst.

I’ve posted on this earlier, and also how media twists the headlines so much that they convey the wrong impression. But what we need is really good data like Toughiee has compiled, and perhaps Indian versions of US sites like CXOAdvisory which takes all public predictions by “market gurus” and checks them against what really happens.

I’ve been at fault too. I asked people to get out of the market on April 21, 2006. True, I may sound like an angel now because the markets crashed on May 11; but I can’t always be right. Predicting the market in the short term is downright stupid; and even in individual stocks, my predictions haven’t all worked.

What the market teaches you is humility. That you can take nothing for granted, and that value is a figment of your imagination. Predictions, therefore are ticking time bombs. Like someone said:

Advise is the only commodity on the market where supply always exceeds demand.


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