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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