"When your doodhwallah (milk-man) and panwallah starts giving stock tips, then is the time to get careful."

I am starting this thread to discuss the current retail excitement and past retail frenzy.

I don't know whether the current retail excitement has reached the level of frenzy.

May be it is still in Sep-Oct 2007 level and not reached Dec 2007- Jan 2008 level.

I remember people who have never dabbled in stocks taking loans to invest in Infy and Wipro during 2000.

In 2008 my dad (who has always been against investing in equity) excitedly asked me how much I am putting in Reliance Power IPO.

More recently I overheard colleagues discussing Coal IPO in the office loo. .

In e-investing itself I am finding

- oldies going Gung Ho on IPOs.
- many new first timers in IPOs.
- newbies who have never burned their hands in bull market, talking like experts and giving advice.

I agree I am skeptical.

I have my own reasons - PE is getting near its historical highs. I don't think that the earnings can go further up. And then there is a serious hurdle of inflation to tame.

Oldies pour in your thoughts,

- Whats the grapevine at your coffee/tea stall in office?
- Have your friends/colleagues recently switched to discussing shares and market, with confidence?

Are we there yet ?

I have the same feeling.

The frenzy hasn't reached the Dec 2007 - Jan 2008 levels, but it is there.

What happened with Gravita India is a sign that retail investors are now getting euphoric.

Retails investors submitted tons of applications even when QIBs and NIIs hadn't shown any interest in the IPO.

NIIs did come in the final hours, but after retail investors had already subscribed the issue a few times.

I am sure 90% of the retail applicants have no idea what the company does except that it is a lead company.

I think it's best not to try and guess the market top.

Instead investors should go with the flow and try to maximize their returns.

At the same time, investors shouldn't forget that valuations are at historical highs.

Best strategy is:

- Stick to quality stocks.
- Book profits partially in over-valued stocks to lock-in abnormal gains.
- Strictly avoid debt/leverage to invest in stocks.

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I agree to Atiker's comments and I think that he is right in mentioning the facts.

I am myself a newbie and I am coming to invest in equities but I assure you that most of the people I come across who used to invest in equities when market was at the peak have still not entered the market. They are very skeptical about the markets and this is giving me the comfort cushion.

I guess it is just the beginning of retail frenzy. I have been sincerely following the markets since 4 years through my father's account and I assure you that the retail frenzy is still quite low. I can't even compare this kind of excitement to the one we saw in 2006.

In 2006, many new people joined the markets and the crash did happen but the markets recovered quickly. I guess the kind of situation we saw in 2006 can come back again if the retail category continues to show this kind of interest. But, that situation, believe me, is still at least 2-3 months away. The markets are looking pretty strong.

According to my limited technical analysis skills and limited experience, I believe that the Nifty can go much higher. Much higher means, that the Nifty can go up 1000 points i.e. till 7200.

Obviously, I am no expert and you people on this forum know that but according to my counts, Nifty can go to that level.

Disclaimer:- I am new~1 month into Elliot Wave Theory but familiar with J. Murphy's book on technical analysis for a year. I started investing in markets at this stage because according to me this is the best time. I may be wrong but the amount of money I am investing, I can afford to lose some of that. I am strictly against leveraging as that is a gamble.

Excellent advice, I guess this is the time to make a quick buck by trading using stop loss.

This is the kind of info I wanted from you guys, thanks for sharing.

I think you mean 2006, if yes then ask Alchemist to correct the post.

man4urheart vasa sanyad ramakasi prudent marketmover sudhashbahu investorb paran and other Gurus -
what are your observations ?

My response to the market is to short Mini-Nifty futures with 27-Jan-2011 expiry with a stop-loss of 50 points.

Bang on! I will follow the same advice.

As mentioned by the someone in the Coal India thread, it may be too early to presume a top.

Coal India's success, coupled with quantitative easing in the US, will bring a whole bunch of new investors, traders and speculators into the market.

These may include individuals, institutions, hedge funds etc.

In August 2007, the Sensex was trading around 14000. From those levels, the final bull wave started and within 5 months, Sensex had crossed 21000.

That was 50% appreciation in 5 months.

The final stage of a bull market can very nasty to short-sellers.

So be careful while betting against the trend.

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It is very risky, better to buy put instead, in this way at least you limit your loss.

Everyone seems to agree we are headed for a top.

Important questions are:

1. When will the top come?
2. How bad will be the fall / correction?

Trying to answer them:

1.
I do not have an exact reason but from the general feeling of the forum members and some of the charts and other technical experts' comments, I am guessing we might hit a top in 3-6 months.

2.

I doubt if there will be another Jan'08 kind of fall. We saw a huge price correction then and this time I feel there might be a long time correction. Prices get stagnant and allow earnings to catch up. From an old post by Alchemist, I remember cyclical time corrections which last roughly 8 years.

Thank you for the advice Alchemist.

I will only be shorting 1 lot and keep a stop loss of 50 points. So max loss will be Rs 1000. If I make a loss I will wait for 1 more month before trying again.

Investors have seen prices fall from 20k to 9k and then back to 20k within 2 years, so if the market falls now, "they" wont book losses, will think market will come back up again. This will not allow the market to crash much but in absence on new money it wont go up too.
This time the killer time crash will come.

Just now one of my cousin called me inquiring about Power Grid IPO. As there was bumper listing of COAL and he heard on TV that people made a good amount of money. So he too applied for it and was now asking me how much he will make on listing day.

From my discussion with him, I observed following -
1. He didn't know that its an FPO, infact he didnt know the difference between IPO and FPO

2. He thought he will get exactly all the shares he applied for. He wasn't aware of the funda of proportionate allotment and over-subscription.

3. He asked me what is a good share to day trade, as he has some free time which he can use to make easy money.

4. He asked me is it okay to buy RIL now for long term(10-15 years), for her daughters marriage.

----

There is again a lot of chatter on the power grid FPO that I can overhear in the office loo, in the pantry/canteen and in the elevator. Gives me a deja vu of Reliance Power days.

you seem to be big bear with PowerGrid FPO. Hopefully, nothing sort of armagaddon will happen with this FPO. Expect the price range to be 95-110 on the dilution day.
PS* check out the option open interest.

Nope I am not big bear with Power Grid FPO .

I am just trying to keep tab of retail pulse, I want to get out when they start getting in droves in frenzy mood.

Link
Experts just love the frenzy.

Actually, it is possible.

A 5 times return in 10 years is around 17.5% CAGR.

This can happen provided there are no major accidents in world economy. .

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I understand the best time to get out of the market is when your wife starts showing interest in the stock market, Just to inform you guys my wife started reading the Economic Times from last Friday .

Wow. Excellent research for those who are married.

You guys have sell/buy signal indicator all the time at home. .

I am sure will get the information when no more business news reading or watching interest. .

That might be helpful for all.

Stanchart super-cycle is quite bullish on India growth story.