This pandemic has shown us new ways of earning money simultaneously along with normal employment.
This pandemic has shown us new ways of earning money simultaneously along with normal employment. Stock Markets have been one of these sources, all credits to Scam 1992 and the trust/ potential everyone saw as it made a recovery in late October before slipping a lot in Feb and March. Those who invested at right time through good knowledge or Stock Market Advisory reaped multiplied their wealth several times. So now with the markets slipping again for the past couple of weeks, how likely a market crash is, in the coming future?
We’ll discuss this idea upon three major pillars of analyzing a market, as follows:
- Fundamental: Fundamental analysis is the key to generating long-term wealth and is the fundamental block upon which the concept of investment rests upon. One of the pioneers in the domain of stock markets, Sir Warren Buffet relies on this concept’s key element i.e. PE Ratio for deciding whether he and his Berkshire Hathaway should be investing apart from using his famous Buffet Indicator tool. As per both PE ratio and Buffet Indicator Indian and World Markets both are overpriced at a huge level representing a bubble waiting to burst. So the crux is yes the markets are overpriced.
- Technical: Technical analysis is more of the tool which helps in generating profits in the shorter term, i.e. less than a year. Through technical we can find the movement of markets and that picture gives us a clear idea of where the markets are headed. If we apply the 200 Moving Average on the Indian Indices, we’ll find that there was a clear uptrend in the markets for quite some time in the past year after fall but in the last two weeks, this clarity has vanished and slight consolidation has been seen on weekly charts. To worry, the trend seems to reverse a bit while markets stand at a very crucial level, on the shorter time frame and Fib levels.
- Investor Behavior: The logic behind overpricing of markets can be comprehended by the amount of retail investment present or supplied in the market, as they are the people who always lose their money in the markets. Right now if we observe the people investing trends, the amount of Demat accounts and so-called Stock Market Advisory firms which have opened are immense and skyrocketing indicating a large mass is in markets right now.
What makes the situation more fearful is, people who have no idea about stock markets have now become the tip-provider or so-called experts. This is a very scary time for people who are beginners without any support or expert guiding them, as they will not be able to handle their investments when all comes pouring down.
Action Plan: So should you simply sell all your investments at once? The answer is No, as even if the market is showing signs of the start of impending collapse, there is a possibility that your stock is on an uptrend and squaring off may result in an opportunity lost. What you should do is create consult a genuine and experienced Stock Market Advisory firm who can guide you in your trades and also help you learn the strategy as well as psychology as in markets, psychology plays a more pivotal role than mere strategies. Experts in Stock Market Company will prove to be the mentors upon whom you can rely upon in testing times.