Think again!

The holy grail of stock market investing has always been the futile attempt to predict the market—its direction, its magnitude, its mood swings. Yet, as countless studies show, trying to do this has roughly the same odds as calling a coin toss. Or, as Bollywood legend Don might put it: “Don ko pakadna mushkil hi nahin, namumkin hai.” Unfortunately for those of us who took Amitabh Bachchan (or Shah Rukh Khan, depending on your vintage) at his word, Don eventually was caught. So, difficult? Yes. Impossible? No. But predicting the markets? That’s still in the “impossible” bucket. So much for putting faith in heroes—be they from markets or movies. Markets can’t be predicted. But behaviour can. What we can do, however, is observe how people react to markets, or rather what peoples’ behaviour and reaction to markets suggest, and that is a good hint to what markets are doing and can potentially do. Why talk of “other” people? I am also part of the “others”, and my own reactions to markets tell me a lot about where markets are and where they could be headed. Not “them,” but us. Because we are those very “others” that Warren Buffett referred to when he said: “Be greedy when others are fearful, and fearful when others are greedy.” Most people focus on the words greedy and fearful. But the m