Herd mentality!

 The feelings of the crowd rather than being sum total of their feelings, nobody would subscribe to individually – as a bull / bear market develops, a lot of people are active part of it. And their feelings – bullish & extra risk taking in a bull market ; vice versa in a bear market- are so because they are part of a crowd & if they were not part of this crowd, then it is possible that their feelings would have been completely different. It is the herd mentality that makes people in a crowd have feelings that they might not have if they are not part of the crowd. In 1990’s the idea of all changing impact of I.T. leading to the dot. Com bubble etc..

If bear market is the best time to buy stocks/ other assets, then why don’t people buy during bear markets ?

In A Bear Market Its Easier For A Person To Admit That He Has Committed A Murder Or Has Stolen Something Than To Agree That He Owns Shares of a co.. Why so? Because the shares prices have been falling at a very fast pace for many months at a stretch, the gullible common investors who had bought foolishly at or near the top level of the indices –Sensex at 21300 in Dec2007,& at 6200 in Dec1999-have lost huge sums of money as it is common for the indices to fall 60% from their top- Sensex falls to 9000by Feb2009 & to 2900in Jan 2003. There is huge amount of negative publicity regarding owning shares. Yours truly also, when I started with speculation in 1999, lost all my meager savings. It was then that I decided that I will make huge sum of money . I looked for the people who hagd been the best in making money from equity markets. This led me to Warren Buffett, later Peter Lynch, Philip Fisher . By following the investment philosophy of these living legends, since 2000 my fund has been generating 30% compounded return p.a.. What that means is that Rs. 1 lakh invested under guidance of Vitastaa Investments & C. in year 2000 is worth about Rs. 10.6 lakhs by year end 2009.

p.s. I am wriring this blog after some time as the months of April, May,July, August, October, November January & February are the busiest for me as I have to update the financial performance of about 2000 cos. I keep track of.