A Wider Perspective

We are coming to the end of 2005. This past year has been an especially good year for the financial markets. Almost all the stock markets be they
Asian, European and also the America's have performed from well to exceptionally well.

The return from the non American markets have been exceptional. Even the old laggard Japan had a spectacular rebound being up 37%!. The following gives you an idea of how the financial markets moved last year.

Japan up 37%
Canada up 22%
France up 24%
Germany up 23%
Switzerland up 31.5
Australia up 17

As you would notice most of these are mature markets. Not falling into the emerging / developing markets that India come under. In these markets the returns have been far more spectacular. The Latin American, Russian and the Turkish markets to name a few have given great returns. As has our market.

But all this is history, what can profit us is the future, what can happen in the days to come, not what has passed. The question is will the emerging markets perform as well in 2006 as they did in 2005. Given the emerging markets have had an exceptional return past 2/3 years, but still the P/E of most markets is lower than the American markets. The growth is much stronger in these regions. So it would not be too optimistic to expect them to perform well in 2006. But as always these markets will experience very volatile movement and some correction which will be scary.

India has received special attention by the Foreign Funds and this interest continues. But the late comers have a disadvantage and this late money can get spooked easily. As for the growth story of India, I would stick out my neck and predict us being among the economic power horses of this century. Of course we will have some momentary ups and downs.

We have to remember sometimes the financial markets correct strongly inspite of a booming economy. Any such correction should be seen as a buying opportunity for long term investors.

For traders in the options market the immediate trend is what matters. Also we have the power to plan our trade and strategy, to profit from any or no movement, using options. Our income generating trades will continue to profit us and help us build our long term portfolio.