Bear Market and Bull Market comparison?
How do you know when is the market in a bull phase and when in a bear phase?
Well it is surely difficult to know during the phase itself – only at the end of the run do you realize whether it was a bull run or a bear run. However there are some signals which are available. Keep looking at the appointment pages in the pink papers – if you see more senior level ads, you are either in or entering a bull phase. In the financial services sector if the price earning ratio is increasing it means the market is ignoring risk. This is evident because there are some inherently risky organizations which can show a fantastic growth rate during a bull phase, but pathetic results in a bear phase.
Yesterday I heard horror stories of a person who was trying to get his demat account access. Right from an operator saying ‘Your account is deactivated..so YOU CANNOT ACCESS your account at all’ (he panicked and asked me whether the shares there are LOST!!). Also heard some horror stories about one big mutual fund and their sales practices. When you hear such stories you know you are in the midst of a market that WANTS to go ahead. Look at the auto industry – everything is going fine – excise duty cuts, general feel good, low interest rates,…the Quarter ending March or perhaps June will have to be slower growth. Similarly all the ‘buy high sell low’ consultantish growth strategies will be exposed. So is it a good time to be going out of the markets. Perhaps no. But shifting some money out of sugar, auto, 2 banks about which many people have doubts,….are nice things to do. The market suddenly pulls the rug from under the feet of companies who are unprepared for bad times.
How much money will the 3G auction require—-and where will the players arrange for that money are nice questions to look at. Have a feeling that the ‘bad times’ will be brought in by the auction. Not just for the Telecom business but for the market as a whole.
Sitting on some cash and being inactive looks like good strategy to me. However, my SIPs are continuing to happen.
PS: there seems to be such a shortage of fund managers that one guy who @#$%^& ed up the portfolio in one place has got a job with a higher AUM. Reward for him punishment for the people who have invested.
http://blog.investraction.com/2010/03/why-are-we-so-bearish.html – read this and see what some others have to say about the market.
NPR
Subra, you touched a nerve. Just last week, I sold off my TVS Motor stock. And I see this blog. I concur with you idea – that you sell off your stock during good times OR when good news floating around. Its a high volatile stock and that clinched my instinct to sell. However, I do continue to hold a few auto component names. Looking to hold long term. I will sell them during times of excessive positive outlook.
However, I also sold off my Bank holdings nearly 6 months back. I want to get back into Banks – not sure of the timing though. Not sure its right now.
Readers, please exercise your caution, before taking any action based on this comment. Thks.
Marshal
i was also not sure what to do with cash lying in saving and fd.. well as you rightly said. wait and watch… my sips are continuing.. will not touch that..
drkhann
Peter lynch has an interesting take on this
He calls this the party trick
Bear market : when he says that he is a mutual fund manager, everyone ignore him and talk to a dentist. He starts buying stocks like crazy at this time..
Market is just picking up : People are just piqued, but tell him that “markets are risky”
Market is fairly up : Everyone ignore the dentist and gather around him, asking for tips..
Market is overheated : Everyone offer THEIR tips TO Lynch, even the dentist gives him some tips, and when Lynch checks them next day, all the stocks have gone up.. He starts selling stocks like crazy at this time..
( But, Lynch says that this a funny anecdote and not take this seriously )