"Price"

But consider the following. The news is always favorable near market tops or when a sector is about to peak out. Most analysts will also be most bullish about the prospect of a sector right at the very top of the market – remember high tech stocks in 2000? Also, near stock market tops the price-to-earnings ratio is frequently low because the problem lies less with the “price” than with the “earnings”. In 1929, the US stock market sold for less than 14-times earnings. But then earnings collapsed and stocks plunged by 90%. Finally, the last people I would listen to for advice are government officials and especially central bankers. In fact, to listen to central bankers is about as stupid as for a women to ask her husband who just spent two weeks in Thailand or in Brazil if he had been faithful….. So, how should an investor navigate in these difficult times? In the future, avoiding losses will be more important than making huge gains.


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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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