"When the going gets tough, the tough gets going"...... do u think this famous quote could give some solace to the small retail investor on Dalal street, who was lured into the big bad world of capital markets in the last few months? If your answer is "No" then think again. Seeing his next door neighbour making some money by abiding to those hot stock tips he keeps reading on his mobile phone, didn't help me much either in staying away from the fastest way to earn some quick mullahs.....
You might be thinking that the great Indian retail investor must have given up all hopes and must have sold out at a huge loss in the current bearish markets. But as they say, though times make you tougher or rather force you to become tough at times. Many investors who would have normaly exited at a discount of 10-15% from their buy price are sitting on losses worth several lakhs which has eroded nearly 50%, and in some cases even more, of their capital. Which sane investor would want to see his capital erode by 50% in a months time? The reality that has made the indian investors tough is that they were left with no option but to see their losses pilling up.
The correction that we saw in the markets was so sudden that everyone talked of a bounce back from each level. No one wanted to be left out of the rally and so kept holding on their all so precious "multi bagger" stocks. A day up and the next two days down. Going by this pattern we had the indices breaching all their support levels and making new month lows every week.
So who should be blamed for all the turmoil? has the world found the scapegoat? There has to be someone who should bear the moral responsibility of all the unhappiness that has spread among the investor community. Should we blame the whilte collared fat salary earning wall street so called "investment gurus" and "hedge" fund managers or the "self proclaimed" investment experts who advise you every possible stock on the street on the pretext of "hidden value"? Or is the problem so macroeconomic that it was beyond the scope of any of these. Then should we blame the Federal governments for allowing the situation to go out of control. Their emergency steps of cutting benchmark rates could have triggered all the panic.
I think the real culprit sits away far from any media glare and away from the investigating eyes of the regulators of the different global markets. He is an innocent man who was told that his performance and bonus was linked to the number of mortgages he was able to sell to the customers. In his urge to outdo his colleague he went about selling the mortgages to even the client with the worst credit history on whom he wouldn't even bet a penny of his own as he was not sure to get back the penny either. Encouraging this customer to take up mortgage and own a house of his/her own is where began all the pain from. That was somethig like the pandora's box. Once it opened then followed more pains..... Wall street i-bankers packaging these martgages and selling them to faraway investors as securitized investment papers..... gave them exotic names and in the mean time the chain grew bigger and bigger and deeper and deeper was the world financial markets going..... want to hear more about the biggest bubbles and its impact on the global financial markets? To follow soon........
