The Great Bull Run: The (seemingly) never ending marathon!
Markets are up! Markets are down!
The RBI cuts the Repo rate….markets move up!
Analysts expect a correction in the markets…but the markets move up again!
Nifty and Sensex hit all time highs…surely, a correction must occur?
Markets move up again! “A correction is expected”. Markets move up, yet again!
What the heck is going on?
If you read the news looking for an answer as to why the markets are surging upwards….you will not find one.
Sure, you will find opinions. One analyst will claim that the Repo Rate cut has still not been totally factored into the markets yet (which is true)
Another analyst will say that a correction is bound to happen at some time (a very vague statement, but also true)
And finally- an analyst will say that we can expect the markets to continue surging up, forever and ever…unfortunately, this is not true. (but it makes for a great headline)
The truth: a mania is in the air
In times of euphoria, mania sets into place. You can think of mania as nothing more than a herd effect. There is no rational explanation for it; it just happens. And when it happens, you capitalize on it and look to make money.
There is usually a trigger that sets a mania off. It can be as trivial as a GDP figure beating its forecast by 0.1%. In this case, the RBI’s Repo Rate cut is what set it off.
In truth, a 25 basis point cut should not cause such a rally in the markets. Any economist will say that this is nothing more than irrational exuberance.
But to you- the retail investor and trader- the economist’s words have no place in your trading decisions.
You are looking to buy. Because when everybody is buying, you buy. With a landmark Budget in place, there is absolutely no reason for you to not be bullish in the markets.
The Trend is your Friend.