Depending on the Mind

I am long and will continue to remain long until 4640 is broken. Many international markets are closed today so clearly the trading volume in India is likely to be muted.

There are so many issues/headwinds that the market is facing currently. We are all aware of them but if you are like me and find that the mind has unconsciously blocked out all the bad news then let me enumerate it here for you 1] The European crisis 2] The possibility of a downgrade in sovereign ratings across the board 3] The US debt unsustainability 4] The inability of the US Senate and Congress to agree on any spending cuts 5] The problems in China. 5] The North Korean succession fears 6] The Russian Putin presidency issue 7] The Israel Palestine problem 8] The Iran nuclear fears. I am sure there are some more problems that I can enumerate given enough time to think about them but this should do for the moment.

As if this were not enough, back home we have our own India specific problems 1] Ballooning of the fiscal deficit 2] The Lokpal Bill issue 3] The possibility of delays in all large power projects/infrastructure projects leading to demands of restructuring of debt. 4] The unsustainable levels of borrowings in real estate 5] Lack of fiscal discipline in state governments. Again, given time, I can force my mind to think of some more issues I am sure.

But why am I spending so much time to write about these problems? If I know that these problems exist then why am I long on the Nifty and why am I not cutting my long positions? The answer to that question is simple. Other than the fact that I am long because my system demands that I be long, it is great news for me that there are so many problems. You know what they say "One death is a tragedy a million is a statistic" Similarly it is easy to focus on a couple of problems and worry about them. But since there are so many of them, as I have so succinctly enumerated, it is difficult to worry about any of them. Once people stop worrying, it will be easy for the market to continue on its merry ways and actually give us the Santa Claus rally that everybody has been hoping for.

Thus I remain long in the hope that the minds of people will actually do what it was designed to do viz block out bad news. I will remain long until 4640 is broken in Nifty futures.