As we enter the prolonged bull market with Nifty at 18,600, here are few tips to remember to make the best of the bull market:
1. Always keep approx. 5% of your portfolio in cash. I’ve seen people getting carried away with the bull market euphoria & they invest fully. When the rally ends & stocks get cheaper, they are out of cash to buy stocks at lower valuations.
2. Avoid leverage bets. I know it’s thrilling to make quick money by taking that loan & invest when stocks are going up. Though, leverage bets are the most riskiest when markets corrects. It can wipe you out completely.
3. In bull markets, investors always forget that Return of Capital is more important than Return On Capital. Don’t make reckless buying decision.
4. As the bull market gets stronger, the valuations start becoming steep. We usually avoid buying at that phase & continue holding existing stocks.
5. During bull market, if you want to buy, buy Large Caps. Small & Mid caps need to be bought at beginning of the bull market & not at the peak. In case a correction comes, you’ll be better off if you follow this advice.
6. Selling everything at every rise and going away may not be a wise decision. Try to ride your profits. Hold on to profitable investments where you have long conviction.
7. Avoid chasing ‘hot stocks’ of the bull markets. Stay invested with quality companies in your portfolio.
These are the timeless principles I’ve learned the hard way from last 2-3 bull runs.
Share this blog with your stock market friends and family members so that they too don’t have to learn these lessons hard way. It’ll help them save both time & money.
A wise person learns from the mistakes of others.
2 Comments. Leave new
Very nice guidance
Thank you. Keep reading