Beware of Fancy Valuations



Markets always tries to mislead investors into committing mistakes.

2000 Bull Run

During 2000 bull run, the K10 scrips were all bogus and had little merit in them and yet the majority of the
volumes and movement happened in those scrips. After three to four years, most of them had been beaten down to pulp. Even Infosys, which was a quality scrip came down from Rs 16000 to 1600 and regained that price only after ten years.

2008 Bull Run

In 2008, the darlings of the markets were Infrastructure, Real Estate, Anil Ambani Group companies, Energy companies and you can see the fate of those companies after twelve years even after the indices are about 2.6 times the highs reached in 2008. Most of these companies have been wiped off.

Current Bull Run

In the last five years, we have seen fancy in banking and finance stocks, NBFCs, FMCG companies . Though many of these companies are good ones they enjoy super euphoric valuations. The question arises whether they will result in lot of value erosion over the next few years ? If yes, it may take a decade or more to get back to these stock values.

Markets always try to sell you fancy ideas at exorbitant rates. If you are not careful in your selection, you can lose big chunk of your money. Unbridled speculation and ignorance of investors often lead to such traps getting prepared.

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