If you have any doubt about whether we are in a bull market, please go and learn your basics. Or believe me when I tell you that we are!

First of all there is NOTHING called a Bull market / Bear market for all the shares.

In 2007 end when I was lucky to sell some shares, I DID NOT SELL BECAUSE THE MARKET WAS in the FAG END OF a bull market. I sold Tata Power, LnT, Cholamandalam, etc. because these shares had amazingly high PE ratios. I honestly do not know what was the market PE . Much later did I realize that i had got the bulls eye in terms of MARKET BULL run – but I was not selling the market, I was selling INFRA stocks. I DID NOT SELL Colgate, Hul, Asian Paints, GSK, Itc, – these had gone up, but had not really participated in the rally. Well surely not in a significant way for sure.

I have always held that markets do not boom – certain scrips boom. For example in the current market uptick, I do not see any participation of the Infra stocks for sure. This bull market is seeing a greater participation by Finance stocks and also the FMCG stocks. A good BUY even in this market could be Reliance Industries – just to say that it has not participated in the rally. However, if oil prices remain low for one more year, RIL could be hanging around the same price for a whole year, while the market could rally up to say 32,000!

First of all understand that the bull market does not announce itself. In the beginning phase of a bull market (which happens suddenly when everything is looking gloomy – this time we were lucky – Na Mo’s election candidature set the tone) – and there are difficult sign stations along the way. The current bull run had significant mile markers – Na Mo’s domination of BJP, his ability to select candidates, his absolute majority….and all this added significantly to the momentum.

Please do remember that this bull run will also taper…and become a bear run. However this is what you do:

In the initial phase of a bull run buy any company in an industry you are comfortable with – say Goodlass Nerolac – assuming you already have Asian Paints. In a bear market GN would have been beaten down far more, so its recover will be more V shaped. It may even be worthwhile to fund this by selling AP (risky, risky strategy). In the middle of a bull run convert back from GN to AP – and in the height of a bull run keep only the blue chips.

These are the broad strategies in a bull run. However it is not so easy.

The toughest thing is to conquer regret (Oh shit I sold Kajaria Ceramics for Rs. 210, now it is Rs. 670). Fear (Subra bought Nestle for Rs. 120, can I really buy at Rs. 6545 and hope to make money?), Greed (my neighbor bought Hitachi at Rs. 69 and is now selling it at 834, I too shall buy the next Hitachi..I hear that Kwality of the foods fame is a good buy at Rs. 42).

Control these 3 emotions, go become a millionaire. God bless.

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  1. I have been reading your articles almost on a daily basis. However, what I have observed during past few days is the growing pessimism about the current bull market in your articles.

    Sentences like “Please do remember that this bull run will also taper…and become a bear run” doesn’t help the normal investors.

    I understand that one has to be cautious when it comes to financial planning. However, being pessimistic is also not going to help.

    Stay Positive, Stay Rich.

    Cheers.

  2. Milan – this is not being pessimistic. It is being realistic. If normal investors believe that this bull run will not taper , then it is better for them to stay out of the market.

  3. Deeply grateful for this one. Quite like the idea of sticking to a sector that is “good/ lucky for one” (my interpretation)

  4. good warning signs..

    A year back my equity allocation was 20:40:40 in large:medium:smallcap proportion which over the last 12 month now reached 50:30:20….

  5. So milan if I say that the market will remain ONLY bullish for the next 399 years you will be happy, is it? just asking. Or u think that the Market listens to me?

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