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“In the short run, the market is a voting machine, but in the long run it is a weighing machine.”- Ben Graham

What have a few opinion polls done to the Indian stock market? Is hope such a huge catalyst? Then what happens to the fundamentals. Let us face it. The fundamentals will take a while to correct in the Indian economy. Companies will struggle along the way. There are quite a few risks that will need to be reconciled with. Then, why are FII’s buying like there is no tomorrow. Will stocks become so scarce that one must rush into buy them simply because we think one formation will come to power?

This is so typical of FII’s and their emerging market investing. They simply work like they are there only to create a stampede. Investors get completely thrown off guard by the FII’s one-way buying in specific markets they enter. It is India’s turn now.

FII’s simply keep buying for days on end while others watch. Valuations reach a point where it becomes pointless to buy equity in that market. Then, the very same guys who bought into a frenzy of their own making start selling. Why? Because, they don’t like something somewhere. Or got bitten in another market where they invested. Or, for reasons completely unconnected to the specific emerging market.

If you are one of those watching what the FII’s are doing, it is important to run your own race and not join the FII’s in their hot pursuits. You must understand that you are in the game for the long run. And, your investments must be paced keeping your investment goals in mind. Frenzy is not for the sane investor.

istrat: Remain ready & stoic if you haven’t invested yet. Your time will come soon.

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