The fundamentals make us fundamentally different.

On Monday the Dow Jones Industrial Average suddenly lost 1597 points in one hour, but recovered some ground to close 4.6%, or 1,175, down. Yesterday it fell by 567 points before rallying to close 567 points higher than Monday's close. The speed of the fall of such magnitude was blamed on, what is known as, algorithm trading, wherein computers make lightning fast decisions to sell, before humans can react. Whereas humans can analyse the market and advise clients not to react, machines are programmed to sell if shares drop by a certain margin and at 1,000 trades per second no human being can match their speed. "There's no way that investors can compete with a computer making 1,000 trades a second," said M Yoshikami. "What it does is it ramps up the psychology of fear and greed for individual investors." The US being the largest market there was a sell off all around the globe yesterday, with the Nikkei falling by 4.7%, Hong Kong by 5.1% and the FTSE 100 in Britain by 2%. What about India? The Sensex fell by 1,275 at one point before paring some of the losses, to close 561 points, or 1.6%, down. The Sensex has risen an eye-watering 35% since the beginning of this year, hitting a new record everyday, after rising 28.8% in all of last year. It is up over 150 points this morning. Experts have been warning about the unbelievable rise in stock markets across the world. A Nageswaran warned of bubbles everywhere as prices of art and Bitcoins went through the roof, and rising bond yields in the US were anticipating rising inflation. Earlier he wrote that valuations of risky assets are too high, as investors choose to ignore fundamentals in the belief that central banks will continue with their easy monetary policy, so that liquidity will not be a problem. The real danger of unreal share prices is that politicians get lulled into believing in a Goldilocks scenario and avoid taking tough decisions for reforming their economies, believes W Pesek. The paradox is that the sell off in the Dow Jones was because of good news on the US economy. In January the economy added 200,000 jobs, wages have grown by 2.9%, unemployment is at 17-year low and consumer spending is up. After Donald Trump's tax reforms, US companies are paying bonuses to their workers which will add to retail spending. Wall Street is worried that retail inflation, which is stuck at 1.7%, will increase, leading higher interest rates. The contrast with India is stark. Economic growth is slowing, oil prices are rising and the government will miss fiscal deficit targets, leading to rising inflation wrote an editorial in The Hindu. The risks are high for us because government policies are being dictated by fears of losing the general elections next year, after the recent whitewash in by-elections in Rajasthan, wrote U Mukherjee. The US fundamentals are going up. Ours are going down.