Is Indian stock market in a big bubble right now? Most of the stocks look overvalued and irrational right now. For example TCS, Reliance and Infosys are being traded at higher valuations compared to Google, Apple and Facebook. Is it a bubble or higher valuations due to future growth? #stockmarket #investments
The Market can remain irrational for much longer than one can remain solvent. There's little one can do even if it is a bubble so it's better to just ride the wave with good fundamentals
Exactly, markets tend to stay in overvalued ranges for a long time. It is a possibility that the sensex crashes to 40k, but it is also a possibility that it remains overvalued till 70k and then the crash brings it down to 55k. If either of us could predict that, we would be millionaires! Staying with fundamentals and also DCA turns out to be the best strategy
Its not overvalued. Higher valuation due to future growth. If you don't understand market cycles you will be surprised by nifty in few years. Reliance is relatively very cheap. See valuations of startups making no money and no chances of making money anytime soon. Jio valuations should be way above 200-300 billion dollars considring growth and startup valuations but whole relaince is valued around 200 billion only. TCS is trading at high valuations.
I think it's overvalued or undervalued based on what your hurdle rate or cost of capital is. If all you want to beat is the FD interest rate then maybe a few stocks can still do that for you. But having a super low discount rate for equity isn't very prudent. If you are expecting a 15 cagr over your investment horizon, then there are hardly any good bets available.
There will be many 25% cagr available in current market. Bull market wave theory- it takes 5 waves for bull market to halt, corrections are possible in between waves and currently we are nearing end of wave 1
one the same boat, but nevertheless decided to invest. if the bubble (if any) doesn't burst even 2 yrs down the line, we know we're gonna regret it. so why not take some chances.
Valuations are calculated based on EPS
Shorted 2000 nifty at 14950, now Iβm almost bankrupt
πππ What was your thesis?
Whatβs the logic behind this? Anyone can make these arguments both ways by looking at past data. Shorting is very risky and complex thing. For most people there are only two options buy or watch market from sidelines. Even stock market expert like Michael Burry lost lot of money on his short position in first few months before the crash.
> Most of the stocks look overvalued and irrational right now. Do you just randomly think that because they've been growing or do you actually have some thesis and valuation in mind?
Based on standard valuations methods and my understanding of tech.
> standard valuations methods Like? > my understanding of tech Doesn't hurt to elaborate on this as well :)
Valuation is a relative metric. Market anticipates how the sector/market will do in the future and assign valuation accordingly. Yes its a bull market but if you follow market closely you would see mid-cap and small-cap have been correcting constantly . Donβt worry about a crash it wonβt happen.. Yes nifty might go down to 16k at some point but in the long run these valuations will hold β¦ for ex- If you look at it we only have 10 crore demat accounts in india .. so a majority of chunk is yet to come..
Because of the same reason I can't even purchase 1 stock of any company ππ, it's so fearful
This is super hard to do. People almost always just notice the market during the bull phase, wait out for a correction, and finally enter right near the top due to FOMO. I would suggest you to just buy a mix of index funds every month, and increase your contributions during a bear market. In the long run you will do much better than most market timers.
Thanks for your help. I'm new grad so I am very hesitant to put money on market at the moment. I'm planning to learn more about stocks and then invest as I don't know anything about investment at the moment.