Don’t Blame it All on Oil! (Re-post)

Following yesterday’s decline, the KSE index plunged 3.64% today, the largest one day fall in the past 9 month. It seems that most of the time analysts try to justify the market’s behavior instead of actually predicting it. A few weeks ago everything seemed fine and every analyst I was talking to was bullish on the market, however, it only took a 2 day fall for them all to change their minds and rationalize the fall as an “expected outcome.”

Many of the justifications might be reasonable, but the fall in oil prices doesn’t convince me that much. On April the 19th oil prices were at $50.33 and the index was 7,528; and on May 10th oil prices were at $58.6 and the index was 7,775; on May 24th oil prices were at $61.6 and the index was 7,859. Is it justifiable that the oil prices are $63 and the index is 7,664? I’m not saying that we are not effected by oil prices but all I’m saying is that the index was at a higher level with lower oil prices.

I hope last year’s scenario doesn’t reoccur this summer because many talk suggests that we will have a ‘W’ shaped recovery i.e. we might test the bottom again.

As for my own beaten up portfolio, I wanted to sell a couple of weeks ago but I didn’t. Although I think its a good time to sell and realize whatever profits we have, I’m still in denial and hoping that this fall is only a small correction and the market will shoot up again.