During the period between February 2000 to February 2001, the share of the IT companies market cap with respect to total market cap of the 500 large companies fell from 41 per cent to 24 per cent, while that of pharmaceutical companies has improved from 6.9 per cent in the total market cap to 7.2 per cent. Likewise, the share of FMCG companies has improved from 12.3 per cent to 16.8 per cent. The share of cement stocks, despite their somewhat wobbling rally lately, slid to 1.3 per cent from 1.7 per cent, a relatively better showing in a falling market scenario. Hence, investors in old economy stocks such as Reliance, L&T, Tata Power etc have much to rejoice as compared to investors of Infy, Satyam and other such IT or media stocks.

During the year 2000, there was a sudden shift towards the short term or momentum investing.

Lord Keynes may never have had so many followers of his dictum - "we are all dead in the long run", as he has now. His short-term economics has long term relevance, or so it seems.

In the present business scenario driven by rapidly changing technology it is no surprise that business models span barely a couple of months and hence the volatility in the markets the world over. The `Dot-Bombs' epitomise this new reality. And hence, we have the on-going debate on the investment strategies to be followed in volatile markets where day-traders or punters rule the roost.

While on one hand we have the likes of Peter Lynch, Philip Fisher and Warren Buffet who are known by their long-term or value-investment philosophy, we have kids barely out of their teens minting money on the bourses with little regard to the strategies fashioned by the management gurus on the other hand. It must be noted that the long-term investing held its own for nearly three decades. However, ever since the IT revolution spread across, old favourites of yesteryears such as automobiles and consumer goods companies despite of good fundamentals were beaten down and finally discarded by investors in favour of the new economy businesses such as IT, Telecom and Media in the year 2000.

Further, tools of analysis also witnessed a change. Thus, Price Earnings to Growth (PEG) ratio became the vogue instead of the P/E ratio and Book Value ratios.

Though these investment styles differ in technique, the objective is the same - to maximise returns. Value-investing pertains to the long-term.

Wherein an investment is made in undervalued stocks using discounted cash flow (DCF) technique. And the strategy is to hold on to the stock going against the current fashion. Whereas, momentum-investing is all about the short term. Here charts and technical analysis is relied upon to get in and out of heavily traded stocks frequently, aping the market and rake in the moolah.

Adapting the value investment technique or relying solely on charts and other short term analysis has its own pitfalls as is witnessed by the meltdown in the new economy stocks. So where does all this lead a common investor. The answer is obviously not that easy. One must understand the drastic change in today's business scenario, where uncertainty and risks are quite high and making a call on the state of affairs of a company 15-20 years hence is almost impossible.

The best bet for an investor therefore, would be to make a periodic assessment of his portfolio or stock taking into account the changes in the business environment. As for the best investment strategy... the argument continues.

Sachchidanand Shukla