Sunday, June 11, 2006

Take a holiday, says Marc Faber

Marc Faber had recently predicted that Indian equities alongwith a host of other emerging markets and commodities were over-valued and are likely to correct by as much as 30 per cent. Well, he was bang on with his prediction. Equities and commodities across-the-globe did witnessed significant selling pressure in the last one month. In India, both the Sensex and the Nifty are down by 25 per cent each. Some of the stocks in the mid-cap pack witnessed a sharper decline (around 50-70 per cent).

In his investment report for June 2006, Marc Faber recommends selling investments at any pull-back rallies during the next few months. He expects a further 30 per cent slide in many of the emerging markets. Read the full report here.

Btw, the decline did throw open some good buying opportunities on Thursday. I picked up CREW BOS Products and Reliance Comm. Ventures Ltd. They went up 20% each on Friday. I think I am going to be trading mostly (something I dont do....!!) in these markets to take advantage of extreme reactions.

Trivia: Will markets resume their journey downsouth or will it consolidate next week or will it claw-back above the 10,000 mark?


Tiberius said...

Opinion on Trivia - The markets I think should trace back to 8750 - 9250 levels and then consolidate. The 11000 levels should not be wished for, for sometime to come.

Ravi Purohit said...

Tiberius: Guessing the index levels "was" a favourite time pass. Not any longer :-(

but, if someone were to put a gun on my head and asked to make a "guess", I would say we will most likely re-visit the lows of the last week. may be even kiss the 8,500 mark.

btw, crew bos and RCVL yielded healthy returns, bought early last week. I am planning to book profits/losses in my investments across-the-board and will try to go atleast 25% cash.

happy investing till then !!

Tiberius said...


Interesting point, havr you realised that the markets no longer has quite days. Gone are the days of single or double digit moves.

Interesting fact - since 1st May till date, the Sensex has had a average daily move (Close - Pre Close) of ~262 points.

That is a WOW number, and it seems this is here to stay.

Ravi Purohit said...

Tiberius: That is quite interesting.
Infact, try computing the daily range on the indices in the foll fashion: (intra_day_high - intra_day_low) / (Prev. close).

These are surely high_on_volatility days.

And if high vol is here to stay, as you suggest, do we have any instruments/strategies to play the same?