Stock market & Finance

We need investment planning in Stock market for our protection because Economics are based on an assumption that human beings are rational. But human reactions to stock market movements are utterly irrational. When markets rise, everybody cheers, When markets crash everybody moans. The underlying assumption of all small investors is that share prices should rise forever. Now, if the price of rice, sugar or petrol rose forever, the small investor would complain bitterly. Yet they seem to think it perfectly fair that share prices should go up forever, and very unfair if share prices crash. How greedy and hypocritical humans are. Only few people here make investment planning in Stock market because they know how to invest in stock market and protect themselves in stock market crash  .

We tend to have a very short memory as in I don’t think many people remember that the sensex was around 5,000 during the last general election in 2004. It then slumped to 4,282 on panic selling. From that low point, the sensex tripled in two years to 12,624 on May 10, 2006 and touched 20 000 late last year That has been a bonanza, fuelling speculative frenzy. So, the 20% correction is to be welcomed. Stock market valuations remained stretched by historical standards, though not by developed market standards. If the sensex falls all the way to the 9.390 level at the start of the year, the market would still have yielded enormous gains to those investors who did investment planning in Stock market in 2004 . 

The long run prospects of the economy are excellent. So, investors should not really panic and always they must move themselves with stock market trend . Yet such exuberance needs to be tempered by sharp corrections from time to time. This sends the valuable message that exuberance is no substitute for judgment. All who invest in markets must remember these aphorisms. Risk and reward go together. If there were no risk, there would be no market reward. Share prices represent subjective judgments of the day, so bouts of euphoria and depression will necessarily drive share prices up and down.


So, our problem today is the notion that markets should rise forever.But it is not possible and they will not and should not. We need sharp dips, to remind investors from time to time that stock markets have risks as well as rewards . So if you Have not done any investment planing till yet for future  than you must do it from now .