La Vie en Rose

There are two types of investors in bear markets:
· Those who are stuck in the market and
· Those who are long term investors.
The difference between the two is honesty level.

First, Sub prime and then crude sent shock waves in world markets. Just when we thought things will be OK we are seeing insane inflation numbers. (Note: Inflation is one form of taxation that can be imposed without legislation).

Tangent: Bad news in the making.....
Before we could muster the courage to fight with that (inflation) we are seeing WAR like situation (read Israel Vs Iran). I hope this doesn't start the WW III.
The way the metal stocks are moving up is really amazing. Markets tend to consider future income rather than the past performance. So are the markets considering increased demand for metals post WAR for restoration in IRAN/Israel?? And is the WAR threat real?

Coming back, what are small investors doing in the market when all this is happening? Aren't they supposed to hold their cash and stay away from the markets? They have done it in the past but something is different this time.....The basic rule is "in a bull market everyone is Genius". So does that mean our Bull market heroes are eager to lose all their booty in this bear phase?? May be "YES".
It's a very insane situation and it would be better to try something that you haven't done in last few years.... repay high cost debt(if you cant earn more at least pay less), book some losses in stocks/MFs, do not touch any new stock or a piece of real estate. What say?

One last thing....
Try to answer this simple question:
WHO IS BRAVE?
1. He who uses chauffer driven car,
2. He who invests in stock market,
3. He who buys a home (assuming it’s an inflation adjusted investment)**,
4. He who borrows money for all the three above,
5. All of the above.
** As per traditional belief.
No matter what you select as your answer you are correct.

So what next????

Take Care...and dont forget to read my previous blogs on strategy and market. Also consult your financial advisor before you take any call. I never take the responsibility for anything that has gone wrong.