MARKET CRASH IN THE MAKING : Sanjay Sir’s Candid Take On The Present ‘House Of Cards’ Scenario

Author: SS | 3rd Jan 2021 | Read Time: 4-6 mins 

What is the relevance of the new year 2021?

Earth has completed one spin around the sun…..We human beings choose a point on the elliptical path where the spin begins, and everytime it gets completed to that point– we call it a year. We start celebrating…rejoicing….and as a fad, start making new year resolutions! Other than human beings, no other organism cares about New Year….we do….and it’s so surprising that for vast majority of people who make new resolutions, it lasts just as long as the hangover… for some, may be a fortnight or a month because by that time the New Year is no longer NEW. Anyways, that’s the way we human beings are….and we will continue to stay that way….

A trivia at this point in time– Do you know 1^st January is just one type of New year.. Surprisingly there are 20+ New Years celebrated globally at different points in time depending upon cultural set up. There is Hindu New Year, Chinese New Year, Ethiopian New Year, Sri Lankan New Year, Islamic New Year, Balinese New Year, Bengali New Year… and the list goes on. Ofcourse, there is the concept of Calendar Year, Fiscal Year and Annual Reporting.. Being from finance, I cannot let these pass by or underscore the importance of these 😉

Talking of markets, they have skyrocketed to 14000 levels and people like me talking of bearish opinion have been ridiculed.

You need to understand something…

1) Every major fall happens after an all-time rise.

2) At that all-time rise, there is utter disbelief that there can be a stronger countervailing force which can bring about a U-turn in the flow of liquidity and sentiments.

3) As market tops–there is excessive exuberance, and herd mentality forces people to discover 10s and 1000s of reasons to justify this irrational exuberance. Instead of talking about trailing P/E ratios, one finds talk about leading P/ E ratios using earning of FY 2022 or even 2023!

Instead of clearly acknowledging that momentum is not supporting the rise in price and that we are in the last wave up and headed downwards, technicians tend to look at smaller timeframes, where some sort of bullish bias may appear.

And then comes the fall…it sweeps away everyone and specially the small retail investors who entered right at the end and has suffered a massive erosion of wealth including their survival capital. This marks the onset of the period where market becomes the devil and is to be cursed… This also marks another resolution making wave.. That they will never ever enter markets again…. only to forget the resolution when they witness another meteoric rise and mostly enter the market again at the end of this rise.. Till they get burnt again.. and the cycle goes on..

No one …I repeat no one ….not even Lord Vishnu could guess the mood of Goddess Laxmi…..As investors and traders, we need to avoid taking fresh long positions at these levels which are not justified by fundamentals by a mile or more…. There is huge crushing down of volatility both from a time and level perspective and this can explode anytime now.. When this explosion comes, the first money which will just evaporate is the FII and not only that.. they will further exacerbate the fall by aggressive shorts that they will build in the system.. As retail investors or traders we will just be decimated if we do not exercise our restraint and behave rationally when otherwise the world is irrational!

The Global Stock Markets are destined to crash like a House Of Cards ….It is my wish and blessing that atleast students of SSEI or those who are following us and are trading or investing- do not burn their fingers in this brutal aftermath which is just about time away…
Best Wishes & Regards

Sanjay Sir