the first time i read a research report on the stock markets, i was confused as to who has written the piece- an analyst or a lawyer. legally and politically- the document was as safe as it could be. in fact it sounded more like a disclaimer. if i was in the seventh standard, and if my english teacher would ask me to write a précis on it, it’d read something like- “the market could go up but the reverse also might hold true. so don’t blame me if you lose truck loads of money, because i myself don’t know what i am talking about.”

i mean playing safe is something, wearing so much protection that you can barely feel anything else. and that is exactly what our analysts do. here is an excerpt from a renowned expert.

“800 points down but the market is well off the lows of the day, if you want to catch on to a silver lining. just a little over 18,000 on the sensex and 5,400 on the nifty. we had plummeted to really abnormally low levels in the middle of trade today. the market suddenly fell without a bottom, about 1500 points, went down to about 17,500 and from there we have clawed back to 18,200.

there has been some buying at lower levels in many largecap and midcap stocks. having said that, the midcap index is still down 7.25. so, it is on the mend. but as we have seen in the past, these pullbacks are continuously getting sold into. so, it’s difficult to say with any degree of conviction whether we have seen the worse for the day, though it is likely the way we had plummeted suddenly.”

let me tell you- this is one of the better extracts. if u read it carefully, you’ll realize how vague the comments are. the author is trying to say the markets will bounce back and it’s the right time to buy. but the last line of the second paragraph inserts the infamous disclaimer. why i said this was one of the better articles is because it doesn’t include the ‘gang of words’ which don’t only make an analyst completely safe, but also totally confuse the reader. “this stock is looking pretty attractive. it might touch xyz levels in the next 2 months.” however, most of the (often self proclaimed) analysts are, very conveniently, blissful about an entire range of words appearing in the english dictionary. some of them are- will, surely, definitely, unquestionably, undeniably, certainly. words often used by such analysts are might, may, chances, seen, odds, probably, likely, expected etc.

my entire point is that how can someone, who claims to be and is acknowledge to be an expert, not have complete confidence on what he claims. it’s alright to go wrong once in a while. but even when an expert goes wrong i’d expect him/her to accept that the analysis he/she made earlier was incorrect and should cite the reason as to why his predictions went haywire. but this is something which is rarely done.

if you ask me it is not very difficult to have an opinion on the markets, that too when your opinion is so vague. i mean there are only two ways our markets can move, aren’t there. another interesting phenomenon is making predictions while betting on market sentiments. for eg: if the markets got slaughtered badly today, the much awaited correction has arrived, so the market is bound to see an upward trend tomorrow. and if you notice- that is the case most analysts build. and sometimes when the market fundamentals are poised against the market sentiments, these analysts are quicker to bury their previous reports than usa would be to bury a car which runs on water.

the best time to notice the credibility of an analyst or an expert is when the market moves in an unexpected manner. all sorts of people would speak out to gain visibility for their organisation. and the gyaan parted often varies entirely from person to person and is at the vague best. for eg: after a major correction some wise nut felt markets will continue falling for another 2-4 days, while another pal of ours felt that markets will bounce back in green. however most of the experts were of the opinion that markets will be range bound. and the various ranges they quoted gave enough space to the markets to do some weird african tribal dance.

so am i saying that there is no person we can rely on? absolutely not. pull out the daily opinions of an expert for a month or two, see how confident he sounds, analyse whether he sticks to his convictions or not and see how accurate his predictions are. and if you happen to find someone whose advice is worth taking, or a moron who is simply asking for it, mail me at content[at]zibika[dot]com, we shall do the needful. adios.