Jeez, a Month and a Half? I've Become Lazy.

What's new now. Let me think. The sub-prime crisis, maybe. It isn't actually new, the effects have been visible for over an year now, but, recently, things seem to be spiraling out of proportion. The Indian Sensex touched 20K. Whew! I'm scared of such heights, what goes up must come down, etc.

What wasn't quite clear was when large mortgage loans against and for expensive residences were given to creditors with low-ratings, couldn't anyone figure that the appreciating housing prices was an over-inflated bubble that was going to burst? This was a repeat of the dot-com frenzy of 7 years ago. With slow markets, the real estate sector became the target of hot money, ultimately, at the expense of the innocent people who were shown the dream of owning their own house, or 7-8 years ago temporarily enjoyed a 6 - maybe 7 - figure net worth, albeit for a few months. Didn't anyone question the underlying fundamentals before the build-up of the frenzy?

Come panic-time and who gains? The investors who see the bubble bursting just before it actually bursts. The BSE-Sensex will correct itself sometime in the future, when and how much, I don't know, but lots of people will lose money, while the smart ones, usually sitting in skyscrapers, in the cosmopolitan cities round the globe, with knowledge at their finger tips, would probably have exited and would be in search of the next big wave to ride on.

There's something about the market that's fascinating. Millions of humans, all pitted against each other, think in many ways similar to one another. As for myself, I am incurring a heavy opportunity cost. Instead of studying the markets and riding the upturn, I'm a student, trying to understand the theories behind everything, watching those-who-don't-quite-care-about-the-technical-analysis buy their flats in Mumbai and Mercedes.

Isaac Newton, the famous physicist, lost some of his money due to speculation in "The South Sea" Company stock in the 1720s. Isaac Newton lost over 20,000 pounds (£1.68 million in today's money) of his fortune. As a result of this crisis, he stated "I can calculate the motions of heavenly bodies, but not the madness of people"(ref). Sir Isaac Newton actually invested twice in the South Sea bubble. The first time he made a very good return on his money. But greed and desire caused him to re-invest his money near the top.