The bonus is that they discount the future scenario in advance. Many would have therefore welcomed this week's technical breakout. It may be recalled that I had predicted the breakout that took place on Thursday that morning itself in the technical column of this paper.

The Sensex leaped by 105 points. But the way the punters went out with a vengeance was shocking. Stock prices of some pivotals shot up by around 5 per cent to 8 per cent, with a sustained surge in volumes.

Such a rise indicates two things. First, everyone is fed up of waiting endlessly for the downslide to come to a close. Second, it reveals the momentum that the market can acquire on the upside.

The investor might as well take his clues from the rise. The market has moved down enough. But for that condition, punters would not have lurched headlong. But what about the profit-taking on Friday? The Sensex is back at 2,922 points. Well, this was to be expected. No market can climb on top of a 3.5 per cent rise, that too on a Friday.

The only surprise is that the Sensex did lose more than 50 points of the rise. One would have expected players to carry forward. If they chose not to, there are reasons.

The standoff between Jayalalitha and Vajpayee is getting worse with each passing day. And it looks like the BJP is getting all set to live without the AIADMK. How exactly this will happen is anyone's guess, but the investor is afraid about fresh elections.

Nothing can be ruled out in politics. Should the parliament be dissolved, we would enter some more months of uncertainty. That would be like pulling out the oxygen tube of a patient in an intensive care unit, which explains why operators were squaring off on Friday.

But the significance of the Sensex closing at 2,922 points, well above the support point of 2,885 points, cannot be overlooked. This is one more confirmation of the recovery.

While all this discussion is fine, the investor, quite understandably, is still sceptical that the downtrend has ended.

Facing a Hobson's choice, he has not been able to get out of the game, waiting for the bottom to be hit as nobody, not even an expert, can predict where exactly the bottom would be.

How does one tackle this situation? There are some choices.

* The first choice is to wait for the market to turn up convincingly. The difficulty in this approach, however, is that by the time there is confirmation of the U-turn, the index would have already moved up by at least 150 points from the bottom. For a long-term investor with a time plan of over three years, this is the right approach.

# For the medium-term player, this approach severely limits the profit potential. That is because given the current economic background there is not too much room to move upwards for the Sensex. A level of 3,400-3,600 points is the best that one can expect in the medium term. That would give the Sensex a rise of around 500 points, or roughly 20 per cent, within the next six months.

And by exercising care in selecting a scrip, the investor can convert the 20 per cent gain in the index to a 30 per cent to 35 per cent gain in his selected scrip.

But this may not be possible as fear sets in. It is difficult for an investor to have a proper perspective. What happens if the stock price goes down after the shares are bought, an investor would worry.

The problem with most of us is that we have very little patience or risk tolerance. The waiting game eats into your nerves. Not without reason, though. Analysts have been pointing out that if the Sensex breaks down from the current level it could go down to 2,700 points.

Maybe it could get worse than that, one would reason. Should the politicians continue to be unwilling to tackle economic issues head on, the country, the economy and the stock markets can indeed go down the hill like a car whose brakes have failed.

Is it not better then to hang on to your savings rather than lose some more in the markets?

Possibly, there is a way out. How about this?

The principle of averaging is quite common with volume traders. They do it in intra-day and inter-day trading. Well one could extend the concept a little beyond. An investor could average his share prices over a period of three months.

Let us look at an illustration. Take Bhel, for example. Say, you picked up the scrip at Rs 214 on July 29. The scrip thereafter failed to move up. In fact, it went down. Your target was that it would move up to Rs 240 very shortly and to Rs 300 within weeks. This can happen as soon as the market mood changes. A return of anything between 20 per cent and 50 per cent in weeks is a mouthwatering prospect.

But if one gets scared because the scrip fell below Rs 214, it makes life difficult. You will miss out on the opportunity. The important thing is to face up to your fear and counter it with an alternative strategy.

In this case, if Bhel does slip badly, you could pick up another hundred shares, say at Rs 180, and further down at Rs 160. Now that the share has moved down from Rs 380 already gives a good buffer. So your worst fears may never come true. The important thing is for you to sit and resolve this fear. Assuming that you had done as suggested above, you would have acquired 300 shares at an average price of Rs 188. And then you need the scrip to move up to only to Rs 220 to give you a 20 per cent return in about six months. In fact, you should go by your conviction that the scrip indeed has a reasonable chance to go to Rs 240, and maybe Rs 300 in some more time is not difficult. You can then see the benefits of this approach.

The market is not only at the bottom, but has broken out. If you are still afraid, use the strategy suggested.

But if you keep away from the market you may regret having missed the quick upsurge that usually comes when speculators are on their war horses in full cry.

They are habituated to mint money in days, once the game gets going. And that could leave you standing flat-footed.