Pundits (be on Television or Newspaper) have a way to rationalize everything that happens. Every market move is due to some or the other news. When markets are bullish, all reasons are bullish in nature and even those that aren’t turned around to mean as such.
So, if the markets are up despite there being a bad IIP nos, its explained away as Investors / Traders betting on a Interest rate cut. If it falls, of course IIP no’s were the culprit. One day the markets rise is explained by what happened in China while the next day, China does not even matter since market action was due to the downgrade of ______ (Fill up the country of your choice).
People love rationalizing. Period. Every move has to be explained by some event or the other. So, yesterday’s move down in our markets were due to selling of shares by the Ex-Promoters of Infosys while for today’s move, we have China to blame.
The interesting thing about China is that, much of the world did not even know that there existed a stock exchange in Shanghai until it started rallying in recent weeks. Today’s one day fall in the market has in a way stuck a match for the others with markets around the world falling in sync. Incidentally, Shanghai Index is way way below its 2008 highs. The relative performance chart of Shanghai vs Sensex showcases how despite being up 38% up in this year, the performance is nowhere comparable to our performance.
As in the past, China will be quickly forgotten as soon as the markets have something else to bother with. Not too long ago was Cyprus / PIIGS a big problem for the market. Right now, most cannot even remember what the issue was about in the first place.
To conclude, I am reminded of Judy Croome’s quote “Today’s news is tomorrow’s history.”. The only way to win in the markets is by sticking with a plan. News neither makes nor breaks the markets. So, stop rationalizing 🙂