Share market is a laboratory, wherein an intelligent investor conducts new experiments to test the mood of the market and tries to reap maximum benefits. The goal of all analysts and researchers is to know the market conditions and right timings of investments. If an analyst develops the tendency that his arithmetic is always right, one is likely to commit mistakes. If one works with caution, ?I am fallible,? most probably one will move in the right direction. Most people are eager to point out the mistake of others. Some admit that they have committed mistakes in the past. Very few admit that the present decision on the basis of which one is proceeding to make the investments could be wrong. Investors with blind beliefs and fixed views can never gauge the mood of the share market correctly.



Judging the mood of the market is a complex and overwhelming task. The prevailing bias affects the share prices. The market does not behave in a reasonable manner, as per one's definition of the reason; it has its own functional reasoning!

For an attempt to judge the mood one needs to understand the operation of ?reflective process? or ?The Wealth Effect? (as summarized in a paper issued by the Federal Reserve.) related to the market. Let me explain this effect through an example. As the share prices escalate, investors have more spending power. With more spending, company sales and prices rise. This goes to ?improving fundamentals? as the spending spree becomes regular feature. Share prices continue to rise; the investors become wealthier, and continue to spend more. The cycle goes on. This is the ?reflective process.? The important issue here is the change in the fundamentals, which has resulted in a series and actions and reactions affecting the share prices. In such a situation the investor who has judged the mood of the market well in time, is likely to derive huge profits.

In a volatile market, or a market deeply affected by recessionary trends, an investor's day begins with wondering what kind of mood will prevail in the market that day. But market is predictable, even when the conditions are bad. Most of the downturns occur because something tangible and real. Let the recession come; when it is coming like the uninvited guest, no one can stop it. But so far as you know that the recession is coming, there are many ways to make money in the share market. Only you need to do the trade, taking the time factor into account.

Unless you are a seasoned investor, judging the mood of the market and making investments is to invite risks of your portfolio. Most of the options become extremely doubtful investments. The share market is fickle. But no use unnecessarily worrying about its mood and spoiling one's own mood. Your smart ideas needs to be put to practical use and you need to use every weapon of investment in your arsenal, and good profits can be expected with this bold approach. Do not a take grim view of the mood of the market. Consider it as your opportunity. ?As previous studies demonstrate, rising stock trends do not improve the public mood; an improving social mood makes stock prices rise. Economics do not underlie social mood; social mood underlies economics. Stock trends do not follow corporate earnings; corporate earnings follow stock trends. Politics do not affect social mood; social mood affects politics? and so on.

The market is volatile; the events that happen in many countries are more volatile and impact the trade and commerce all over the world. The extra-market events like politics and economics have a telling effect on the mood of the market. As a prudent investor, you have to take it that ?every crisis is an opportunity? and look after your portfolio accordingly.