MoneyTantra-Zen & The Science of Investing


Tuesday, May 23, 2006

Now Economic Times says the same thing!

What we said about 50 days back about bond yields and equity earnings-yields is now being said by Economic Times. You will recall that we had predicted the fact that the equity markets are overpriced using reasoning that the bond yields were higher than equity-earnings yields and definitely way higher than the dividend yields. You can see our article talking about this dated April 02, 2006 at:

Sensex or NonSensex? Part II: Is the Indian Stockmarket Overvalued

While the same argument is now being advocated by the Economic Times dated May 23, 2006.

Don't give up. Invest in bonds to beat stock blues

This is another indicator that predictions based on solid fundamental analysis will come true. Of course, at the time of prediction, just about a month or so back, many market experts had been upset about our predictions no one was ready to believe.

But what remains true and will always remain true is that fundamental logic will drive what is going to happen and not whether anyone agrees with it or no one agrees with it.

Sensex has started Falling

As predicted earlier by us nearly 50 days back, Sensex has started its free fall last week and is still falling. Of course, we could not have predicted when it would fall, but we had predicted that it was overvalued at 11000 and would touch about 12000 and fall. However, it went on to touch 12600+ and then remained volatile around 12000 and then began its fall which is still continuing.

To read our predictions read:

Sensex or NonSensex? Part I: Is the Indian Stockmarket Overvalued

Sensex or NonSensex? Part II: Is the Indian Stockmarket Overvalued

Sensex is going to fall!

So that should put more faith back in fundamental mathematical analysis and also away from financial mumbo-jumbo that characterizes each over-exuberant bull phase in all markets of the world.