Stocks RISE, Anxiety Rise, Excitement at peak, Is it time to get out of markets???

Is it time to cash out of stocks?

The market has nearly doubled in a little over five years, and with each record close, the temptation grows to take your winnings and flee. If only you had done that in the crashes that began in 2000 and 2008, you might be a lot richer.

Plenty of experts think stocks are about to drop. But many others offer compelling arguments for the rally to continue for years.

The bulls point to a strengthening INDIAN economy that will help companies generate big profits. They also like that companies have plenty of money to keep buying back their own stock, a big force pushing up prices.

The bears argue that, with the CNX NIFTY index closing above 8,000 on Friday, stocks already reflect years of future profit gains. And that forecast is suspect anyway given that so many economies around the world are stumbling.

The BULL and BEAR cases in detail:

BULL CASE: A STRONGER ECONOMY

In the past one month, markets have ended with investors selling in a recession, or bailing out because they anticipated one. The odds of a downturn anytime soon? Not very high, at least based on the latest economic reports and forecasts.

The INDIAN Economy has shown a growth of 5.7% in GDP amounting to 1.842 trillion USD.. One reason is companies are hiring at the fastest pace.

More people working means more paychecks and money to spend. And the good news can feed on itself. People who never lost jobs but were worried about layoffs might start spending more, too. Consumer confidence has hit its highest point.

All this makes it more likely that companies will keep posting higher earnings.

BEAR CASE

STOCKS NOT CHEAP

It's fine to forecast big profit gains well into the future, but what if prices fully reflect expected returns?

That's what SENSEX and NIFTY on. They cite a widely used gauge of stock value called the price-earnings ratio, or the price of a stock divided by its earnings per share. If a share costs Rs100 and financial analysts expect the company to earn Rs5 per share in the coming year, the P/E ratio is 20.

The key here is that low P/Es are considered a better deal. Each dollar you spend on a stock "buys" you many dollars of future earnings. High P/Es buy you fewer future earnings

My Stock Picks for the coming week i.e 8th Sept 2014 to 12th Sept 2014: Hexaware Technologies, GMR Inf, Divis Lab, South Indian Bank, NHPC, IOB.

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