Monday, March 30, 2015

Anything is possible in Stock market

After 2000, the Nasdaq dropped more than 70 per cent, then the US housing market collapsed for the first time after the Second World War. Never before in the US had housing prices collapsed as it happened in 2007, 2008, and 2009. 

Home prices dropped more than 50 per cent in some of the US markets. And in 2008, oil prices went up to $147 a barrel but within six months it dropped by $32 a barrel in December.

All I want to tell you is that we had a stock market crash in 2007 and 2008 when the Dow Jones dropped by 50 per cent but many financial stocks dropped 90 per cent to 100 per cent because banks had gone bankrupt. When someone tells me markets can't go down, it's ridiculous. Of course, they can go down.

Oil prices have gone down, most commodity prices have fallen 40-50 per cent from their highs. In some markets in Asia, real estate prices have also weakened considerably. Why can't equity markets also drop by 30-40 per cent? 

I would like to see equities down 40 per cent. Then, I would say the stocks are reasonably valued.