Let the markets Crash

Let the markets Crash: Yes you read it right; I sincerely wish that the Indian stock market crashes further by another 3000 points and comes to the level of around 5000 points on the BSE Sensex. Before you jump to the conclusion that I have gone mad let me give you my thoughts on the same.

We wanted to buy a new fridge (not that the old fridge had gone kaput, but that is another story). So we went to different stores to compare the prices- we went to Reliance, Big bazaar, Spencer’s, 2 different independent shops close to our home, I even called my brother in Delhi to find out the price in Delhi if it is less than Gurgaon. Then my wife suggested that we should wait till Diwali to get a better deal. So around Diwali we repeated the whole exercise and finally we bought the fridge for 49000/ Rs against a MRP of 53000/- Pretty good deal, considering it is one of the latest models available in market and the Misses is happy.

Now let me tell you what we did with the old fridge, we have bought it in Kolkata for Rs 7000 in 2003 and it was in perfect condition, but was proving to be small for our growing needs. So when we checked for the new fridge we asked for exchange price for the old fridge. The maximum we were being offered was Rs 800/- by the dealers, that is true a princely sum of Rs 800/-. So we decided to use it as a clothes cabinet in our home. Then once we have brought the new fridge home we decided to call our friendly neighbor hood Kabariwallah just to find out if he will be willing to take the old fridge. Apparently the Misses did not like the idea of using a fridge as a clothes cabinet (so much for my innovative ideas). Guess what guys the friendly neighborhood kabariwallah was willing to give us 2000/- Rs in hard cash for the same on the spot. We decided to hold the sale for one more weekend and asked him to come next week as we want to take a call if we want to sell it or not. He immediately increased the offer to 2250/- It was too tempting to resist and I collected the cash and he with his 2 assistants took the fridge from us.

Now you must be wondering what is the logic of telling you all this mumbo jumbo about the story of 2 fridges? Let me now finally come to the point.

1. The fridge we wanted to buy we did a thorough research checked with 5 different stores and waited for Diwali sale and only then bought it at the cheapest possible rate.
2. The fridge that we wanted to sell we again checked with various sources and finally sold it for the highest possible price.

Got it? Elementary my dear Watson Elementary! When you want to buy some thing you wait for the prices to drop and then you buy it at the lowest possible price and when you want to sell ( even if it is an old fridge) you look for the highest possible price and only then sell it.

Now my question to you my friend is: How long you plan to be in Stock markets? 1 year, 2 year? 5 year ? or 15 years? ( same goes for Equity Mutual funds) If your answer is more than 5 years then you are going to be a net buyer for next 5-15 years? Right? So if you will be buying stocks and equity mutual funds for next 5-15 years why would you like the price for stocks to go up? You want to buy them as cheap as possible so you would want the markets to go down even further.

I am not getting here in a debate what is good for economy, and stock market being a barometer or thermometer or sphygmomanometer of the economy ( whatever the saying is). My only point is if you are a net buyer let the prices stay low for some more time so that you get a long opportunity to do bargain hunting at very low price.

Happy Investing.