Fooled by the financial markets...

The bad story continues in the Indian markets belying all expectations of a broader recovery post the budget on 5th of july.

Some of the budget provisions especially higher tax on the super rich and its clarifications led to another large fall in the main indexes on friday.

Some of the results especially in the financial sectors continued to add to the woes of the market with YES bank falling over 20%, Dcb bank 20% and RBL by 15% all on the day of the earnings.

These huge negative sessions have been the norm especially from mid 2018 and changes were expected post the Narendra Modi government coming back to power which it did with a thumping majority.

However these last year has belied all beliefs in the power of compounding in the equity markets. How can we even think of 15% cagr long term when the cuts in the broader market is over 50%!!

Somewhere doubts start to creep into the mind around if this cagr is just another marketing gimmick for the financial markets.

Lets look at the following.

1. When the whole thing is on doing a SIP who profits... the intermediaries and the AMCs.
2. When the markets go up and there is good return , then the fund managers and the intermediaries continue to get great benefits and large bonuses... who benefits..? Same as point no 1.
3. When the market drops , these so called as experts start looking at who has lost the most.  I mean if they were experts should they not have done the right thing and sold off the stocks which now seem to be at " too high valuations"? . However there is no reduction in their bonuses or anything.. no penalties for their mistakes. They continue to make large sums of money .. customer can go to hell!
4. How many stocks today at 50% or less than their IPO prices... humungous. Look at the recent ones itself.  So these so called experts make their money and cheat all the people coming into the markets. Who benefits?

So in all the above cases who is benefitting.. the financial markets and its itermediaries. The people working there only seem to have positives built in.

Now lets take a quick look at the so called returns of the nifty over the years.  At first cut it looks fantastic. However, when we start peeling the onion we start finding the following points.

1. The nifty continuously changes its top 50 stocks
2. Bad performing stocks are taken out frequently and better performing stocks are brought in. Take a close look and some big names who were fill it shut it .. all today dropped to less than 10% of the value.

So when 2 happens can the nifty ever  go down? Nope.

Its a game...  we need to understand the game and separate the marketing from the reality and then learn to play the game.

Thats simplefinancialsense