Coming to the crux of our market discussion today, I am sure, if I tell you hey, the long-term prospects of this market are great and we have all the reasons to rise much higher from current levels, you would believe me. Am I right or am I not wrong?
However, there are some essential rules which you always need to understand and follow to run this full course of a ‘Bull Market Marathon’.
First of all, for anyone who smacked technical analysis as just a method of ‘trading’ intraday stocks, has been made to chew his words, at least now, with the Fibonacci Cycle Theory which I had proposed in 2014-15 is now looking like a strong possibility.
If you haven’t, READ IT, I seriously recommend you to read and understand it. (https://www.linkedin.com/pulse/indian-stock-market-cycle-fibonacci-pattern-kunal-bothra)
The series is magical in its true sense. Whether it would hold right or wrong going forward, we would know only a decade later. But just to give you few examples of such historic Fibo series seen in many global charts. Japan had a crazy 13-year Bull Market from 1975 (1976) to 1989 and then went into a 21 (next in Fibonacci number series after 13) years of Bear Market ending near 2009-2010. US Index DOW Jones in its prolonged history has seen a similar Fibonacci cycle and is currently going through a GIGANTIC era of this cycle.
Highlights of this phase of the Indian Bull Market
Well, you know it’s a Bull Market when:
· You trade only long, and if a trade goes south, you know there is only way to recover your lost money back, and that is to HOLD. This is BULL Market for you.
· Investors hear any new find by a market veteran/guru and they flock to it as if the stock would soon be ‘OUT of STOCK’. This is BULL Market for you.
· The recently IPO issues creating new ‘OVERVALUED’ zones, leaving many investors perplexed.
· When you have stocks which were considered the ‘T’ group stocks, and they suddenly are the best return garners for the month. You know you are in a Bull Market!
· When this happens in a financial newspaper :
· On a lighter note, you get a dozen requests/followers to connect on Linkedin/Twitter every day, and you are the centre of attraction in a get together if you are discussing markets. This is BULL Market for you.
· Finally, the much feared topics such as DeMo, NaMo, GST, Trump, Crude, Fed hikes are actually aiding this Bull Market, and not the other way round, (as was theoretically or widely assumed to be).
Do you agree?
However, there are also constant set of fears in every Bull Market.
· Fear of unknown: Something which may be trivial may be assumed to be HUGE!
· Fear of heights: Every new high would bring in renewed criticism.
· Fear of losing all your profits: By not booking out at the right timing.
· Fear of being stuck with a Junk stock: Your asset may underperform for a significant duration than others.
· Fear of losing out on a great investment opportunity
· Fear of underperforming benchmark: When your investments would suddenly be inclusive of not so high yielding stocks.
· And the biggest Fear is being trapped on the sidelines by not INVESTING in this market.
Irrespective of which camp you intensely believe you are in, I strongly recommend that you induce discipline in your method of investing. This is what separates the wheat from the chaff. Keep revisiting the objective of your investments, the stages of growth of your particular investments at regular time intervals.
Markets have an uncanny habit of priming your thought process making you believe with full confidence, and then once you are primed to perfection, changing the situation completely to throw you off guard.
Doing these may just be a boring routine, but very much necessary:
· A regular health checkup of the market internals, Liquidity check, Sentiment check etc.
· Keep a tab on the sectors which participate or drag for longer duration.
· Stocks which lead/lag for a longer duration.
· Revisiting core portfolio at regular intervals.
· Most important: Rely on the ability to override ‘emotion based’ investing.
Every Bull Markets will go through a phase of strong counter attack by bears. Its part and parcel of the so called market evolution process. Your patience, your deep pockets would be tested umpteen number of times. And soon you would realize that there could be completely new set of rules and principles accomplished in this Bull Market.
The real topic therefore “Is this the Beginning of a Prolonged Bull Market”?
The answer could be seen only in the future. But I am pretty sure that more than the destination, the journey would be a thrill.
As a discipline, however high you look into the sky, keep your foot grounded, and rationality always handy in your pockets.
In Investing / Trading, you may lose few battles here and there, but your goal is to WIN the WAR.