FEAR and PANIC - Unwanted panic (on the back of Fear, a lot of which are Imaginary not real) presenting an opportunity to get in the market at-least for the time being (for few months) before the actual Fear and Panic starts taking a toll on the market, which would be Real not Imaginary – VOLATILITY is the name of the game

1. 1 Fear and Panic: Unwarranted & Imaginary at‐least for now – Still some time away from real Panicking zone
FEAR and PANIC ‐ Unwanted panic (on the back of Fear, a lot of which are Imaginary not
real) presenting an opportunity to get in the market at‐least for the time being (for few
months) before the actual Fear and Panic starts taking a toll on the market, which would be
Real not Imaginary – VOLATILITY is the name of the game
When markets react, especially to downwards, a number of reasons starts cropping up, which
could be attributable to the sell off but when markets moves upwards only one or two factors
emerge to support that up‐tick. This clearly shows that markets are in for a tough time going
forward as Imaginary fear followed by panic keeps a check on markets.
When i say this panic is backed up with fear, fear of Greeceʹs debt concerns having a contagion
effect and spreading over to other parts of Euro Zone, continued Euro weakness, fear of China
slowdown, and so on and so forth. The funny part of this Panic and fear is that the European
markets do not panic as much from their own debt crisis when they are open but panic more
from the fall in US markets (which open almost 6 hours later than the European markets)
behaving as if the Euro Zone crisis is first going to impact US and then will come back to haunt
European region. Just look at todayʹs action, European markets were earlier little negative,
recovered a bit, then turned little negative, all the major European indices suddenly witnessed a
sharp cut to the tune of 1% to 1.5% till US Market open, US markets open little negative and
European market continued in the same region till the first hour of US, all of a sudden (though
nothing happened), US market started to sell off and European markets starting to witness deep
cuts and closed in negative to the tune of 2.5% to 3.7%. As if European Markets/investors have
more confidence on US investor’s judgment of European economy than their own
judgment. THIS IS PANIC BACKED UP WITH FEAR. :)
If we look at this Panic, the Sell off triggers or this huge volatility has largely been a culmination
of different factors (some real, some imaginary) such as:
5th May, 2010
• EUROPEAN Factor (continued on and off concerns over Europe’s spreading debt crisis)
• Greece bailout package of 110 billion euros not enough
• Expectation of China Slowdown (donʹt you think that Chinese authorities action lead you to
believe that a lot of these are deliberate, leading to continued under performance in Chinese
Markets)
• US earnings expectations too high
Vinit Tulsyan http://vinittulsyan.wordpress.com

2. 2 Fear and Panic: Unwarranted & Imaginary at‐least for now – Still some time away from real Panicking zone
• Valuation concerns
• Foreign exchange move has been one of the biggest factor for the recent volatility
• Euro’s continued weaknesses and US$ continued strengthening against Euro
• Strengthening US$ due to policy reversal expectation and a ‘V’ shaped recovery expectation and
also flight to safety
• Strengthening treasury (flight to safety)
• Australian Mining Tax,
• Oil Decline/Short Squeeze
• Sell off overdue
• Concerns over Financial Reform
• Goldman fear (though there is nothing significant in it)
• Inflationary fear (now in Emerging markets than subsequently in Developed market)
In my opinion some of this panic is for real while most of them are imaginary in nature. People
talk about China slowing, but in any case China is going to 10% from 12% not to 3%, which is
still the highest in the world, higher than India as well.
I am sure that it’s not only the bailout or the concern over debt crisis, but the entire
restructuring which few of the countries within Euro Zone will have to go through in order to
bring the debt crisis situation under control is increasing the fear of Greece’s contagion effect to
other parts of Euro Zone.
The big daddy of all these fear has actually not yet arrived i.e. Policy Reversal by US FED and
Inflationary concern in US. Whenever these fear take centre stage (in my opinion they will start
taking place couple of months before the actual policy reversal action), the panic would be
multiplied multifold. Multifold due to the above mentioned fear factor (the biggest one),
continued fear factor about China Slowdown (as China continues to tighten its monetary
policy), continued EUROZONE’s debt crisis (Greece might take a back seat but then you have
Portugal, Spain lined up to replace Greece), increasing talks of major European economies
starting to follow US in Policy reversal (though it might not happen even after 1‐2 months of US
5th May, 2010
FED first move due to continued fear on EUROZONE debt crisis), continued Euro weakness on
the back of its own crisis and strengthening US$ (due to domestic factor) etc.
Vinit Tulsyan http://vinittulsyan.wordpress.com

3. 3 Fear and Panic: Unwarranted & Imaginary at‐least for now – Still some time away from real Panicking zone
I continue to standby my earlier article that the best months for equities within 2010 are over. In
my article dated 1oth January 2010, I discussed at length on various topics i.e. India ‐ An all
Inclusive Growth (with a case study on Bihar), Dollar‐Carry Trade ‐ The name is the game, Job
Less Recovery (explaining it through UPS case study), Jan‐Feb expected to be best months for
equities in 2010 and expectedly a policy disconnection in‐between developed & emerging
economies’. Click on the link to download the file (http://www.box.net/shared/qhy1r5smdt).
Somehow, the moves/actions by Chinese authorities lead me to believe that they are
deliberately trying to cool off their economy, which in my opinion will continue their
underperformance going forwards as well, which in‐turn will also keep a check on emerging
markets.
I am convinced that the real panicking situation has still not come; it is still few quarters
away. Volatility is the name of the game as far as markets are concerned with expectedly
positive data flow on employment (next week data will be the most closely watched data
mainly on the back of existing concerns over Europe, debate over consumer led recovery not
earnings etc.) , GDP, retail sales, PMI, consumer confidence and a subdued Inflation in near
future and continued fear over China, Euro zone debt crisis, weakening Euro, emerging
markets continuing to tighten policies etc.
I am also convinced that markets couple of months down the line will be higher than today’s
level though not significantly. The real selloff or the panicking situation, which is still away,
will take a real toll in the market with a number of factors coming together and contributing
to this expected panic.
5th May, 2010
Vinit Tulsyan http://vinittulsyan.wordpress.com

4. 4 Fear and Panic: Unwarranted & Imaginary at‐least for now – Still some time away from real Panicking zone
Excerpt from my article dated 28th November 2009, titled Dubai Fears – Collateral Damage…A
catalyst for Market Re‐Pricing, Time to move on… on the ongoing debate over European Debt
Crisis:
Click on the link to have full access to my report http://vinittulsyan.wordpress.com/
Thanking You,
Warm Personal Regards,
5th May, 2010
Vinit Tulsyan
http://vinittulsyan.wordpress.com/
Vinit Tulsyan http://vinittulsyan.wordpress.com