Markets are very volatile since last week. The reason is quite simple; there is a continuous fight between bulls and the bears in the market. There is continuous fear in the market as investors are confused, is the economy really picking up or is it going to simply turn and start falling again? Is the question asked by everyone. During fear desperate trades are made to recover all the losses made in the last year. If you have made losses and I mean huge losses then do not be in the rush to recover everything at one go, because I assure you one thing that you wont be able to do that. You will end up adding up your losses rather than making money. I know it is a hard truth to accept that investors have made losses in the past and the best thing to do right now is to simply accept the mistakes of the past and trade now with certain discipline and at a very slow pace. It is quite disturbing to know that even in these good markets investors are still making losses. If the markets have fallen down to such extents that it wiped out wealth’s of investors then I can guarantee one thing that it wont give you back that wealth so easily. That is the basic rule of nature and basic rule of market. It is better to learn from our mistakes of the past rather than making the same mistake again.
Rains have entered the country with some decent showers. Though people have been complaining that the arrivals of rains are late, but people skip the fact that the world is facing climate change and this phenomenon is going to be very common now. If we look back in the past years then the summers in the country are getting hotter and the winters are getting very cold. The only reason is global warming and that is resulting in climate change. People have to get used to this fact and stop worrying about it. The media has been scaring the people every minute that the rains are bad there is going to be shortage of water in the country, agriculture will be affected. Why speculate so much rather than wait till the end of July and then gauge if the rains are actually deficient. I have strong feeling that by the end of July the rains will be sufficient enough to satisfy the people and as well the news channels. When I switch on the TV today I am really amazed by the number of news channels in the market and all of them giving the same news of rain shortfall every 15 minutes. This itself creates a panic among everyone.
Rains form the backbone of the agriculture in India and if the rains fail the government will be in deep trouble handling the economy. The government is aware of these things and it will create artificial rains and save the crops. It is completely possible and India has done it in the past. This time the government cannot take the chances of risking its hold of power in the centre. The agri commodities are also getting a bit risky to trade right now. No major trends can be set for next 15 days to come in the market. The agri commodities are at the mercy of the rains and I will be seriously concerned if any of the investors are trading big quantities of agri commodities in the markets. You have to calculate your risks prior to taking any positions and it will be wise enough if you take the advice of people who have the experience of investing in the commodity markets.
In this week’s article I only intent to give you this message that you trade in a disciplined manner and make money from the market. Think of it as a hen giving golden eggs but do not kill the hen to have the maximum. Small calculated profits are always better then big losses. I am not giving any analysis in this week’s article because how much ever I try to predict the market at this point of time Mother Nature will be against my prediction. Rather than misleading my investors into taking wrong positions I would rather wait for the monsoon to give me the answers for the questions that I have for predicting the market.
As far as gold and silver is concerned there are high speculations in the market and the prices are being held up artificially for reasons well known to the people who are holding the prices. If I refer to my previous article, I had mentioned that with the economy starting to recover, Dow Jones recovering, our own markets are recovering there is no reason why would anyone be investing in gold? I am convinced that at these levels new shorts are being created in the market in the background. There is no possibility that gold is going to be bullish until it closes above $1015 for one week continuously. At that point of time even if the prices are high there is no harm in buying gold as an investment. The gold prices are overvalued in India even considering the rupee value. With the gold prices at these levels the right price of gold should be around Rs. 13900 levels and below Rs.14000.
If you can really hold on for sometime then my advice to investors is to wait and watch and you will see it yourself how the markets change their course without even a warning. Have a nice week and a profitable week.
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