Posted by: mayankhyanki
on Jan 27, 2008
The current market crash has lead to a complete chaos and mayhem among the investors; and the one most affected by it is the small investor. I somewhat believe in the theory of the famous Wall Street investor Peter Lynch. He suggests small investors not to invest in a volatile market (booming or crashing), not to indulge in inter-day trading and not invest at all unless one has got surplus money: or else you might end up losing everything, more than you would ever gain!
Analysts have explained the current market crash by the recession in the US, the FIIs withdrawing their money from the developing market(read India) to more stable markets(less risky, developed markets). The crash is also accredited to Hedge funds and other big investors moving out of market after cashing on the big bull run. However, a Fed rate cut(Fed recently announced a 75 basis points cut) meant more money into the US and thus more investment in the markets. But alas, nothing goes by the books in a market. Just look at the clipping below to get an idea of how the markets behav at times, I couldn't keep myself from laughing after having a look at it :).