Business Daily from THE HINDU group of publications
Sunday, Oct 14, 2007
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Business Daily from THE HINDU group of publications Sunday, Oct 14, 2007 ePaper |
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Stock Markets Markets - Interview 
Krishna Kumar Karwa D. Murali Like Cade in King Henry VI, you may fear ‘neither sword nor fire,’ but being ‘whipped three market-days together’, as the Bard’s Dick says, could be real trouble. To help, Boult volunteers in Pericles, Prince of Tyre, “Shall I search the market?” It is doubtful, though, if Boult’s exercise would yield answers that you badly look for, especially if, like Launce in The Two Gentlemen of Verona, you are frightened of ‘the hangman boys in the market-place’ who had stolen ‘the other squirrel’! So, we go to Krishna Kumar Karwa, Managing Director of Emkay Share & Stock Brokers Ltd, Mumbai, to get clarity on pressing questions about the soaring bourses. He is a chartered accountant with about two decades of experience in the capital market across research and risk management, portfolio and corporate advisory, who co-founded Emkay in 1995 along with Prakash Kacholia. Well, here is Krishna handling, over the e-mail, a rapid volley of posers from Business Line. Hey, what’s happening to the stock market? They seem to be on fire! When you have 6 billion plus dollar inflows in less than 8 weeks, markets will be on fire. These inflows once again reiterate the India ‘growth story’, which the foreigners seem to possibly believe more than the locals. They say the capital market index is a barometer. Is it, really? Barometer, of what? Stock market indices reflect the state of the economy in the longer run. However, with increasing globalisation and cross-country fund flows, sometimes in the shorter term these indices reflect the heightened impact of inflows-outflows, relative valuations etc. As a small investor, what is the one thing I should do? Indian economy is in a structural transformation. Without bothering about short-term fluctuations, small investors should regularly park their savings in the Indian equity markets to participate in the India ‘growth’ kahani. And, two things I should never do, now? One, don’t try to time the market. And two, let the experts invest on your behalf, if you don’t have the time and inclination to understand equity markets. Honestly, who is making money these days? Investors with good portfolios have seen substantial portfolio gains in the last 2 months. Traders, I am not too sure. How do I keep my shirt? Belief in the long-term economic expansion, periodical portfolio restructuring, and avoiding leveraged positions will enable all investors to grow and never worry about losing their shirt. Individual risk assessment is very important. Given a choice between watching the intra-day chart and a Twenty20 match, which one would you prefer, and why? Watching intra-day chart for entertainment can be fatal! The choice is already made. If I begin seeing the Sensex numbers in my dreams, what does it mean? Just that you are trading beyond your capacity. When can I begin to spend my paper wealth? A proper assessment of asset allocation will enable you to balance your wealth. You never spend your wealth; you spend income earned from your wealth, samjhe. Investors will do well appreciate the difference between wealth and Income. I find people asking one another investment tips when riding the elevator. Is this a dangerous sign? Probably, it’s time to be cautious. And, may be, take some money off the table. Psst... What are you investing in? One saying that comes to your mind when you see investors losing their cool and tearing their hair. And one joke that makes you laugh when the market crashes... Look at market fluctuations as your friend rather than your enemy, profit from folly rather than participate in it (Warren Buffet). Greed and fear are the two emotions you need to control to be a successful investor. More Stories on : Stock Markets | Interview | Financial Services
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