8/10/2019 Beware of Sharks While Investing in IT Stocks
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Sunday, January 23, 2000
Beware of sharks while investing in IT scripsK
Seshadri--------------------------------------------------------------------------------
JANUARY 21: Are the market players fooling themselves? I believe
sinerely they are! "he soft#arestoks are on the bo$ne again%
an& I still annot bring myself to reonile #ith their
val$ations%
#hihever #ay I look at them!
Yo$ think I m$st be ra'y - not ($st a ase of being ($st a
ontrarian! )ell% let me take solae that even)arrent *$ffet too
annot make any sense of #hat is happening in the tehnial stoks
senario!
Yo$ ask #hat is #rong #ith Infosys rising one again% I hear! Is
it not slate& to to$h Rs +,%,,, sooner
than later% as I hear in the ro#&s that mill aro$n&
tra&ing terminals in the brokers offie! )ell% Infy #asonly an
ill$strative piee! In fat% more than a &o'en stoks are mimiking
the style! "he market took a
sare on the #obbling )e&nes&ay% #hen the teh balloon
threatene& to &eflate at Nas&a.! *$t p$ntersare bak at
the game all over% one again here% one the U/ tremors settle&
&o#n!
)ell% yo$ annot blame the p$nters really% an yo$? 0illions of
people are .$e$ing $pto #rite he.$es
to infoteh setor f$n&s via the m$t$al ro$te! "he malaise% so
to say% has sprea& like a aner in anorganise& manner! /o%
it is the most sensible thing to go long% before 0s ome #ith their
shopping
arts!
I &o not think all this is normal b$siness% &espite the
mass ation! It is .$ite easy for a #hole nation toget into
hysteria! If it an happen in Na'i ermany% #hy not in stok markets
here?
"he only thing that I annot fig$re o$t right no# is #hether the
haps #ho keep investing in the infotehstoks% even #hen they reah
their fren'ie& peaks are $n&er a hysteria3 or are they
ra'y3 or are they
simply fooling themselves! )orst still% I s$spet they are
en(oying their self-&eeption!
Researh #ork in a U/ University reently s$ggests that inompetent
people have no inkling #hatsoever
that they are &oing the most st$pi& thing! I am slightly
e4aggerating to &rive the point home! 5n the
ontrary% they ten& to believe that they are amongst the top
intelligent segment! "he problem starts #henyo$ think yo$ kno#
best! An& in the onte4t of the In&ian stok markets%
investors have ome to believe
that they kno# best #hile investing in soft#are stoks
$nmin&f$l of prie levels!
Realisation &i& &a#n #hen Infy ref$se& to move
above Rs 16,,, an& rashe&! *$t $ntil a r$&e shok
hits yo$% yo$ #o$l& ontin$e to believe that yo$r ations are
in&ee& right! It happene& in 7arsha&0ehtas time
an& it is happening no#!
*$t s$h inompetene is not restrite& to those #ho tra&e
at 8alal /treet or at the millions of terminals!
If yo$ still annot omprehen& the gravity of the malaise%
onsi&er this! 9esson kept tra&ing in opper
an& his employers foole& themselves that #hat he #as
&oing #as right! "he inompetene arising o$t ofmisplae& self
ass$rane le& to the #iping o$t of his employer!
9esson is not alone! "he I0 foole& itself that its
presriptions #ere right% #hen it ha& to res$e
o$ntries in so$th east Asia! No#% they have ome to
akno#le&ge the #rong &one - they &i& bringabo$t
avoi&able &amage an& har&ships to the eonomies! 9et
$s move loser home! Yas#ant /inha is
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talking abo$t 'ero-b$&geting an& $tting the osts of the
establishment! )ell% these talks seem to be for
the gallery% an& I am not s$re that even he is onvine&
that these things #ill ome abo$t!
5n the other han&% everyone kno#s that there is no #ay this
o$ntry an s$stain the ost of the
b$rea$ray! Yet% #e #ill &o nothing to bring it &o#n! 5n
the ontrary% #e #ill not even prevent it from
bloating f$rther! 5r take the state po#er orporations! "hey #ill
ontin$e to give po#er freely or at aost m$h lo#er than the ost of
generation!
"hese are blatant e4amples of inompetene! Not only &o the
politiians kno# it% b$t even the p$bli isa#are of it! Yet #e are
too inompetent to hange these tren&s! )e live in a #orl&
#here inompetene
is not a rare phenomenon! "he trage&y is% it is most ommon!
*$t inompetene #ill e4trat its prie!
Yet% people make money on softy stoks% &ont they% yo$ ask! I
s$ggest that rather yo$ t$rn the .$estion
to yo$rself!
8o yo$ think yo$ o$l& make money in this game? If yo$
ha& logge& into the reent peak% yo$ #o$l&
kno# #hat I am talking abo$t! Yes% it is not $nlikely that many
people took a hit! Yes of o$rse% some
ma&e money! )ho are these% #ho #ent la$ghing to the banks!
"hey are the shre#& operators% #ho ha&hone& their
skills in the market for years! "hey an not only rea& the p$lse
of the market at any moment%
b$t an pre&it #hat the p$lse #o$l& be the ne4t &ay!
It is s$h sharks that yo$ are pitte& against! An& ifyo$
have been #athing the Nat$ral eographi hannel% yo$ #o$l& kno#
ho# easily sharks fee& on the
small fry! Ask yo$rself if yo$ are not beoming a #illing
prey?
"he U/ st$&y &oes mention that it is the inompetene of
people #hih hin&ers them from reogni'ing
their o#n #eakness! In fat% the inreasing ten&eny of &ay
tra&ers in the U/ persisting in this ativity
&espite onstantly losing o$t is a phenomenon #hih falls in
this ategory! An&% it hasnt bothere& Allan
reenspan! /o% &o #ake $p! "he temptation to follo# the
ro#& is great!
*$t &o not kik yo$rself into believing that that is the most
intelligent thing to &o! speially if it is yo$r
har& earne& money! It is .$ite a &ifferent matter%
if yo$ are playing #ith money% #hih yo$ have marke&for risking
a#ay% ome #hat may!
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9t&!
