Equity markets are like a yo-yo?

In my class I am normally asked “Is the equity market like a yo-yo?”, the other question is “Is the equity market like a roller coaster?”

My answer to both the questions …is NO. NO in capitals.

Both the yo-yo and the roller coaster have a predictable movement. You know the yo-yo will go down and up in exactly the same time. It will not stay down for 3 years and then be up for 22 days.

Similarly in a roller coaster the speed, the rate of rise, descent, the time taken, the number of gyrations is all fixed. You know that the whole ride will take “20 minutes” or “40 minutes” – and in a worst case scenario all you need to do is close your eyes! Once it stops you can get down.

If you close your eyes to your equity portfolio, you could wake up holding DSQ, Silverline, Lml, Patheja forging, Shaan Interval, Indiana dairy…etc. because you did not see what happened to the promoters of these companies.

PS: even on google you cannot find some of these companies – when some of them died they were burnt, and then their ashes were buried, hoping they do not rise again!!

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