Is it right time to invest?

The recent meltdown in the US has caused panic across the world. I still remember few days before 1-Jan-2008 NDTV Profit, a popular news channel in India, was telecasting a program. The program was interviews with Fund Managers from big houses and the program was shooted in the cruise. These fund managers were high profile big shots from big mutual fund compaines. They talked about "Where the sensex will go by 2009?". There were very few people who could have guessed it correctly. All the fund managers unanimously said, the sensex would move up to 29,000. Today, it is closed well below 10000 and all those decoupling and growth stories have turned out to be mere day dreams.

Not to blame the fund managers. They have little knowledge about the whole crisis and interestingly the guys who are worst affected like Bear Sterns and AIGs did not know how deeper the problem. The crisis in housing led to a crisis in US financial markets which in turn heated up on US banks. The banks stopped giving loans to people and companies to expand their business. As there is no enough funds, there is no investment. Unlike the dotcom burst, this crisis is much deeper as it affects the entire spectrum affecting the growth of all industries. So, we have reached a place where the governments are trying to infuse money and give a rebirth to the banks.

On the other side, with the current crisis and if you are the first time invester, a good question pops up "Is it right time to invest?". Without getting emotional, a typhical trader/invester has to buy in low and sell at high. Since the stocks prices are going down many investers are pulling out of stock markets and sit in cash. Same is the case with mutual fund redemption. But everyone is not like. Certainly Warren Buffet thinks differently. Few weeks back, he invested $5 billion (read it as five billion dollars) in a bank and surely he is going to get back $50 billion dollars in another ten years. "All time is good for investing" as long as you invest in the righ company.

As far as India is concerned, these days you get many stocks for throw away prices. Shares are sold like mangoes, banana in Sunday markets. Certainly, sensex will not go up to 3000 or 4000 (though reaching 6000 is not ruled out, in a worst case). But on the other side, many long term investers believe that India is going to have a bull market and this bull market is going to be the mother of all bull markets. In a worst case, one can get 100% returns on their investment.

Be a wise invester - buy in dips and sell in highs. Panic will not give you money.

Hope to see the similar program this year. However all the fund managers may be sitting in a 2 Star hotel or near a swimming pool and still talk about so many things which we do not understand. That is why they are what they are.

Happy Investing.