Stock market status
Stock markets worldwide crashed precipitously about 35%. The lowest day was 23rd March. That is when the first lockdown was underway in India, as well as in many countries over the world.
Many new bored people took up stock trading as a past time. While most of these new stock pickers were buying stocks randomly, some were studying hard and learning the art.
The past year, stock markets have risen tremendously from March 2020. Those who entered after March made money. Rather, most did.
This has in turn created a unrealistic expectations in the minds of these people who made money with no study or talent of their own, but pure luck. They will in turn persuade their peers to join in on the fun directly or indirectly.
Governments have infused huge loads of free cash into the economy to boost the system and prevent a depression. This has led to even more rise in the stock markets and few will understand what is coming.
All this brings in more people to buy the stocks and the many discount brokerages make it super easy for anyone to join in on the fun.
This raises the stock markets even more.
Even now, the Indian Nifty index is trading at a earnings multiple of over 40 which is way above the historical average. And people are saying, this time it is different.
Well, when people say that, soon another crash follows. And no one knows when that will be. Maybe a month from now, a year, five years. No one can guess. One day the markets will reach their highest point and the next day will start the race to the bottom.
That is when these careless stock pickers will be punished who will make the mistake of betting larger and larger amounts of money propelled by their luck-fueled profits.
