One of the fallouts of a democratic set-up in a country (for better or for worse) is the need to arrive at a 'consensus' to do (not do) things. And we as the biggest democracy in the world have been following the consensual approach for ages to arrive at decisions to do (how not to do) things.

Be it the investigation of a scam, or the creation of a dam, we require a consensus. And, at most times, the consensus is so large, that we fail to arrive at a conclusion, the very basic premise for which the consensus was required!

This is very unlike the Chinese set-up where a decision is taken by the concerned authorities and then communicated to all those affected by the same. They have proved that things happen this way. And we have proved, time and again, that things don't happen our way - the consensus way.

While we are not denying the basic right of speech and freedom of expression of thought that our constitutional embodies, what we mean is that when the consensus is 'not required', it is not required. And when a consensus is required, it 'must' be arrived at!

Something similar is visible when one considers investing in stock markets. When the markets are buoyant and everything that you pick up rises in value in a short span of time, participants (investors and speculators) tend to form a consensus that the euphoria will not end soon.

This is what was seen when the Sensex was nearing the 7,000 levels. All had formed the view that the next target will be 7,500. And all have been proved wrong again!

More importantly, small investors, who (usually) follow such a consensus approach to investing, are the first to fall pray. Now, when the markets have reached the early 6,000 levels, the next 'consensus' target has been set at 5,500!

Why? There is no change in the fundamentals of corporate India, monsoons are expected to be normal this year (assuming the weatherman is right) and the India growth story remains intact from a three to five year perspective.

So, why has there been a change in the outlook towards where equities will go from here on? Consensus, dear! It's simple, consensus! Everyone says so!

Investors (not speculators) need to ingrain in their minds what the legendary investment guru, Benjamin Graham once said, '. . . in the short term, the market is a 'voting' machine whereon countless individuals register choices that are product partly of reason and partly of emotion (consensus). However, in the long-term, the market is a 'weighing' machine on which the value of each issue (business) is recorded by an exact and impersonal mechanism (fundamentals).'

What we have tried to indicate time and again through the example of Mr Market is that investors should look at market fluctuations in terms of the Mr Market example. They should make these fluctuations as their friend rather then their enemy.

This means that they should neither give in to temptations that rising markets bring with them nor should they think of doom when the markets are falling incessantly. Do not follow the 'consensus' approach to investing in stocks markets.

Either do your own research or take advise of an expert (not the self-proclaimed experts!). No consensus on the Sensex, please!

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