These days the equity markets have been going down quite steadily, especially in the last 2 weeks add to that the Rupee tumbling to new lows.. and a lot of us investment advisors are actually facing a lot of free time and actually for a change this is not a free time we are having out of choice or something we like. Some like me spam FB half the day since business is slow !
Also it is during this time when all advisors get together and are always complaining how bad is the Financial Literacy in our country where most people don’t understand anything outside FD, Banks, PPF or Post and how badly even the so called equity investors behave. We all mourn together on a tea stall ! :-/
I just came across this amazing stat forwarded to us by HDFC Mutual Fund and was awestruck how badly do retail equity investors behave. I couldnt help but share it here with all of you !
As you can see in the above table the retail investor was crazily buying equity funds in March 2008 at the highest P/E. If you were following the Sensex you will certainly remember that in January 2008 the sensex touched 21000 !! Since then when the markets have gone down and the P/E’s are shrinking in the last 4 years (2009-2012) the cumulative inflow of retail investors in Equity Funds is negative (-6000) crores !!!!
In short the retail investor is time and again mistiming the markets, he invests in good times and runs away in adverse times where as he should be doing exactly the opposite.
I would just like to remind you what Sir John Templeton said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria !”
Needless to say that there is only pessimism that we see all around, but times will change, I am sure.
p.s for anyone who is even more keen to learn & know about the current market trends I can mail you the complete report by Mr. Prashant Jain Fund Manager at HDFC Mutual Fund.