Why do we like stocks?

For stocks, the sky is the limit for imagining earnings growth. With imagination as the constraint and luck as the tool, investing is gambling, and gambling is exciting

by V. Anantha Nageswaran – Mint

Nothing arouses as much passion in the investment community as stocks. The passion is doubled if the commentator is not as gung-ho about stocks; I must add, at current levels it is pretty much everywhere—as Yours Truly is.
To be accurate, I felt that investors were overly pessimistic in March. So, it was not difficult to recommend to clients to buy equities. By the third week of April, the Standard and Poor’s (S&P) 500 had gone up by 30% and the Morgan Stanley stock index for Asia excluding Japan was up by about 32% in dollar terms. So, it was easy to ask clients to trim their exposure a bit. Of course, since then, the S&P 500 has gone up by another 10%-plus. But the bulk of the action has been in emerging markets. The same Morgan Stanley index for Asian stocks (excluding Japan) has gone up by 20%-plus since then. I reiterated my cautious stance in May. In hindsight, I was too early to sound the note of caution on equities. Never mind that we also recommended emerging market bonds, still keeping that call open, and that they are doing rip-roaringly well, etc.

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