Has the economic slowdown changed after an announcement by finance minister?
Does the stock market provide a real picture of growth?
If you had noticed, we had provided our reasons on why the economic slowdown is temporary on September 20, Friday morning. By the same time, our finance minister has announced a series of changes. It had huge impact on the stock market. Stock Market increasing by 1921 points or 5% in a day is a huge thing. If this is not enough, on Monday, September 23 market rose by another 1075 points.
What does this signify?
Many who were waiting for the stock market to correct a bit more could not understand this move. Till September 20 morning, everyone was trying to find the bottom in the stock market and then find a way to buy stocks. Most of the stocks were available at greater discount.
In just 2 days, most of the stocks rose by almost 10% and some rose more than that. Almost every sector had some superstar stocks like Eicher Motors, ITC, L&T, etc.
Below are some of the points which get reiterated if you need to make money in the stock market,
Look out for opportunities
Start accumulating stocks at every level
Believe in the stock market
Believe in the economy
Don’t give heeds to noise in the market
From August month, every news spread had the warning of the economy slow down and be careful. It is just a phase ion every economy. We also need to be aware that if there is anything too bad, Government will surely step in to provide some stimulus. It had happened time and over again.
Making wealth in the stock market is more related to emotional sense. This quote by Buffet is proven again and again,
“Be greedy when everyone is fearful & Be fearful when everyone is greedy”
Economy Slowdown Vs Stock Market rise ;
Generally stock market projects the growth of the economy. A profit margin of the companies grows which results in the growth of the country. This Earning Per share (EPS) define the growth of stocks as well. When this EPS grows, stock market analysts increase the price of stock automatically looking at the future earning prospects.
At times if the euphoria for a particular stock is high, it will command higher evaluation. During these times, the price of the stock will increase exponentially. As the price keeps increasing, investor interests will also start increasing on this stock. If the future earnings start disappointing, automatically people will start selling the stock. This will bring down the stock price.
Till last month, it was all about an economy slowdown as the earnings started disappointing. Whenever there is distress in the economy, the Government will step in for the benefit of everyone. This happened last Friday, September 21 also. Looking at good news itself, Sensex gained its lost points by 1921 or 5%. By Monday, September 24, it had gained nearly 8% which is a record in its own history.
Patience is the virtue ;
Now received WhatsUp message projecting the good things which happened in the last 3 months. There will always be negative and positive things happening in the country. If you are convinced about the prospect of the country’s future then you can start investing and add when there is huge fall in the stock market.
Every fall will be followed by a rise which may happen immediately or in the near future. Control your emotions which is the way to create wealth in the stock market.