I am sure the headline would grab a lot of attention and the purpose of the headline was primarily to make people sit-up and read this post. Obviously,I am not serious about my view or target and the purpose of this post is something else. Read on.
I get to read and hear a lot of “Expert Opinion” and Views on the Nifty as well as individual stocks. Tune into any business channel and you have an army of Analyst / Experts voicing their view, right from the Nifty to the Rupee to Crude oil and any other asset class that is traded.
So I thought let me also post my view and the hence the title for the post. Whether this view is right or wrong is an important issue but what is more pertinent is What should someone reading or receiving this opinion supposed to do?
I may be eventually right and the Nifty may reach this magical figure of 10,000 may in a year or 5 years or longer. I don’t have a krystall ball and presume no one else has. In this context what is an opinion or a view worth?
The answer is practically nothing! What if the Nifty reaches 10,000 in 3 years and I will do another blog-post claiming that “I said so way back in 2012”. But would the reader or recipient of this opinion be benefited? Probably not.
Consider this scenario: What if you buy Nifty today, trusting that I am an Analyst worth betting on. And Nifty falls to 4,000 in say six months and then rallies hard to 10,000 by 2015.
I can still claim that I was a genius in predicting a target of 10,000, way ahead in 2012. But what happened to you as a person who acted on my advise. Would you be still around with the same investible capital?
By the time Nifty cracks towards 4,000, you would have probably exited your bets and even cursing me and yourself for having acted on my opinion. But, I am theoretically right and justified in claiming myself as a good analyst.
Enough rumbling. What am I harping at?
Well, my point is that please do not fall prey to Analyst Opinion or Forecast. What you need as investors or traders is actionable ideas with acceptable risk-reward parameters. Just because an Expert predicts a fancy target, it does not mean that market would head to that number in a hurry.
As a trader or investor, you should consider factors such as your risk tolerance, reliable target and a logical stop-loss before acting on an opinion or advise.
Investors and traders interest would be better served if the Experts appearing in public forums and media give clear actionable ideas rather than their opinion. Along with the view, if the Experts give a stop-loss or a reference point where they might want to review their earlier stance would do a world of good to the investor community.
Trade Safe and Don’t get hurt.