Some Thoughts on Markets

“Life is difficult”, said M. Scott Peck as his opening remark in ‘The Road Less Travelled.” This is a great truth, in fact, one of the greatest truths in life. Ask a day trader and it will be vindicated. This fact is surely being realised by investors in Indian equity markets, who had been made used to garnering riches (and only riches) in the run up that was seen in the past three years. As seen from the fall in global equities in the past few days, more so in the Asian markets, there have been prophecies, which have emerged betting on a further meltdown. In these times, long-term investors (not traders or speculators) need to ingrain in their minds what the legendary investment guru, Benjamin Graham once said, ‘…in the short term, the market is a ‘voting’ machine whereon countless individuals register choices that are product partly of reason and partly of emotion (consensus). However, in the long-term, the market is a ‘weighing’ machine on which the value of each issue (business) is recorded by an exact and impersonal mechanism (fundamentals).’