2009 Road Ahead

After a year of battering and tremendous wealth erosion, experts don’t think that the situation is going to improve in a hurry. Almost all investments avenues, barring gold, gilt-edged funds and a few hybrid funds, have tanked big time. Looking ahead, the clouds of recession are threatening to keep matters subdued in 2009 too.

However, it is in times like this that most of the bargains, which become a part of urban legends, are available. More than a quarter of the BSE 500 companies are quoting below their book value. The market capitalization-to-GDP ratio has come down to 50% levels from 100% levels and this suggests that there is value available in the market.

At the same time there are what experts call, ‘value traps.’ These are the companies that demonstrate that there is value available and when the investment is made, they tend to fall further. If stock price is the only factor an investor looks at before taking a buying decision then chances are that one would end up seeing the price decline more.

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