What’s up at the stock

market?
IN case you are thinking of jumping into the stock market given the sustained gains it has seen since July,
be sure to ask yourself a few simple questions before you make any decision.

I rarely write about the stock market, and whenever I do, it is not flattering. Especially not when the
market is in the middle of registering massive gains. The reason is simple. There is always a catch, and
rarely do retail investors come out ahead.

The brokers are adept at selling stories. They have one set of stories for when the market is rising, and
another set for when it is falling. When it is rising, their story will tell you how these gains have only just
begun, how they still have a long way to go, and how the bad old days are over.

When the market falls, the stories will tell you there was never a better time to buy than this. When the
dust settles, you will be left with the story and the broker will have your money. Of course, there are
exceptions, important ones, but the majority of stock market brokers should be dealt with cautiously.

So what makes me suspicious of the current rise? Just ask a few simple questions. First of all, where is
the rise coming from? You will notice something. From July to the first week of December, the market
rose by around 22,500 points. Of this, more than 14,000 points were contributed by two major sectors
only: banks and energy (I am including fertiliser in energy).

Automatically, you notice a lopsided growth here. More than 60 per cent of the growth in the market
since July has come from companies operating in two limited spaces only. Does this mean the economy
is booming? Or might it mean that something is happening in the world of banking and energy that is
driving their earnings up?