The crash of over a 1000 points followed by a an upmove of almost 900 points!
incredible volatility ...And something likely to continue till the markets get some sanity.
It is strange that when the going is good, every theory is twisted to suit the good
mood. Its either the "new economy" or a "paradigm shift". The reality that, history repeats
itself and those who ignore this tenet do so at their own peril.
The more things change the more they remain the same. Exuberance in the markets have
to lead to despondency. A long irrational bull run, has to lead to a painful bear trend.
Hopefully, we might be wrong. And this bull run is based on valuations and the future
prospects.
What it all boils down to is what to do in such conditions?
As a trader, it is a wonderful place to be in. The volatility throws up new trades on either direction.
and the hedging that options provide are the perfect tool to make some profits.
For Investors, it would be better to stay away. Until sanity and valuations catch up.
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