| The volatile market and the inflationary times! | | | | Be extra vigilant during this time. All the normal |
| What more is required to cause extreme | | | | rules applicable to share trading hold good but with |
| annoyance to an investor? In this period of | | | | certain additional qualifications. Do not attempt to |
| recessionary trends, inflation has turned out to be | | | | predict the market, but try to understand it. Be |
| a decisive factor in share markets. The extent of | | | | strict about the stop loss range that you have |
| rise in the inflationary trends will determine the | | | | provided to the shares in your portfolio. Do not |
| future course of interest rates, which in turn will | | | | relax the self-imposed rules, succumbing to |
| affect the share market performance. | | | | emotions. Make a thorough survey and research |
| Rising inflation is, as such, not bad for the share | | | | once again on all the shares at stake. Inflation |
| market, but the transition phase causes confusion | | | | works wonders in certain segments of the |
| in the minds of the investors. The starting point | | | | industry, and chance exists to make huge profits, |
| for an investor is critical. A slight error in the | | | | provided you are able to spot such companies. |
| timing and the investor is likely to suffer heavy | | | | If you are doing online trading through which |
| losses. If past trends are any indication, investors | | | | transactions take place fast, you need to be |
| who entered the market subsequent to previous | | | | extra-cautious. During inflation, many factors |
| sharp declines, have reaped substantial profits | | | | affect share prices and this happens overnight. |
| over the following years. It is reasonable to | | | | Issues like interest rates, high oil prices, GDP, |
| assume that such an opportunity exists for long | | | | change in the fiscal policies of Central Bank and |
| term investors from the recent rush for equity | | | | the Government, have direct bearing on the |
| sell off. | | | | market conditions. This is not the time to risk |
| Inflation initiates the chain reaction. When it | | | | your entire capital on stocks. |
| surges, shares of companies suffer, but not all! | | | | Higher inflation leads to lower equity values. |
| Increase in the commodity prices pushes up the | | | | Interest rates rise. You get more money for the |
| cost of materials and corporate profits are | | | | amount invested now. It is, therefore, logical to |
| affected adversely. But some companies, who | | | | expect that for the amounts to be received in |
| own high sales figures, find their golden | | | | future, the value needs to be lower today. A |
| opportunity, through the inflationary trends, when | | | | higher return is possible if the share prices are |
| they have no competitors. | | | | lower or decline now. The aftermath of inflation |
| An investment strategy in inflationary times could | | | | like unemployment, varying interest and exchange |
| be: | | | | rates-all these create uncertain conditions in the |
| For an investor, well-versed in the art of | | | | share market. |
| investment, whether up trends, downtrends, | | | | The prices of shares are directly related to the |
| inflationary times or depression in the market | | | | performance of any company. How the |
| does not matter. The market is volatile under all | | | | management of the company will take in its stride |
| these conditions, the differences are only in | | | | and function in the changed economic scenario is |
| degrees. Those who have the capacity for risks, | | | | the main issue, which will have bearing on the |
| take more profits in inflationary times, if they are | | | | share prices. |
| day traders. Such investors have up-to-date | | | | Inflationary times are testing for the share |
| reports about the trends in the market, are | | | | market. An investor develops mental blocks to |
| seized of the issue of entry and exit times. But | | | | invest in shares; he is unable to think freely and |
| for a new investor, this is not a good time to | | | | do normal trading. |
| make an entry in the market. | | | | |