Even the Experts are Baffled

About a week ago, when the Indian stocks markets were badly beaten in the face of the global crash in the financial markets, I was unwell and was home. I was watching financial news on CNBC and I logged onto my computer. I had an opportunity to chat with a well-known Indian stock analyst. I asked him online if I should buy shares of Parsvnath Limited and Orbit Corporation. That day, Parsvnath was quoting at Rs. 37 and Orbit Corporation was quoting around Rs. 55. I asked him, "Sir, should I add Parsvnath and Orbit Corporation in small amounts till 2010?" I was amazed at his reply. He said, "Don't be brave. The markets are falling. Mid-cap real estate companies might fold up."

There was such a great palpable fear in the markets. I was going to call my stock broker and I was going to place a buy order for 500 shares each of both the companies. But I stopped myself because the analyst was afraid. I wasn't afraid but I realize in hindsight that following the analyst's suggestions kept me away from some nice profits I might have taken home. Within the next 7-10 days, Orbit Corporation went up to Rs. 82, which translates into a gain of Rs. 27 or 50% per share.

I learned a very important lesson in the stock markets and the lesson was: Never trust the experts and the analysts. Listen to what they say with a pinch of salt and then follow your instincts and analysis.