Not the end of the world!

Investors have almost never had it worse and the panic is almost frightening. Still, for those who are brave enough, this may be the opportunity of a lifetime. By Shivshanker Verma

"Has it ever been worse?" a colleague recently asked me while we were discussing the free fall of the stock market, the despair in her voice palpable. After the Sensex pierced through the 10,000 mark, on the way down, yesterday, that is a question many investors must be asking. They must also be wondering when the market will bottom out and recover, at least partly, so that they can exit their holdings.

The answer to the first question is no. I remember the global crash of 1987 only vaguely, as I was a greenhorn. Since then I have witnessed dramatic market falls thrice, from close quarters. The first was in the early '90s when we discovered that the promise of Harshad 'Pied Piper' Mehta to lead us to a promised land of super profits where every company was worth 10 times its market value was pure nonsence.

The second was just after the turn of the century when a bunch of pied pipers promised us an entirely new land of infinite possibilities, where technology ruled and where mundane things like profitability and cash flows didn't matter. That promise turned out to be even more unadulterated crap.

The third crash was a few years later when our left parties threatened to take over this country and make it another Cuba or North Korea, which are the only remaining lands of milk and honey for the modern communists.

The last one was quite different from the first two. Market valuations had reached obscene levels, way beyond the fundamentals of the economy warranted, just before the first two crashes. The economy was about to take off and valuations were quite justified when panic hit the last time. Also, the first and last were localised while the crash after the internet bubble burst was truly a global one.

The current crash though is by far the worst, in terms of both the speed and extent of the fall. When the Sensex first went past the 10,000 mark, a prominent business channel came up with a jingle to mark the occasion and its anchors wore baseball caps with 'Sensex 10,000' emblazoned on them. Yesterday, I thought of calling them up and asking if they still had one of those caps!