YES, WE ARE IN A BEAR MARKET

We have seen free fall of the world indices by 40% average, all time high volatility, daily average trading range of 7% in the Indices and 12% in stocks.  

Interim bottom was made across world indices between 17th and 19th of March and Indices have come up by 15% from there.  

There is more upside to be seen. The indices have the potential to go up another 8% to 10%. However, this up move is a secondary move, post which, another primary down move is waiting round the corner. This is not a time to buy stocks and dry up ones ‘remaining’ liquidity.  

Ideal exercise at this time is to ‘identify’ stocks which are moving down by 20% when indices have fell by 40% and then, they have moved up by 30% when indices have moved up by 15%. In other words, screening stocks which have inherent buying strength. I have learnt from my gurus and markets that heroes of one bull-run are never repeated in the next one. It is better not to waste time in analyzing Bajaj Finance and HDFC’s of the world.  

As in the previous notes, I maintain that it is always better to buy stocks near all time highs (ATH) rather than all time lows. (yes, there are stocks near ATH even in this market). One of my mentor says, “don’t buy low and sell high, rather, buy high and sell higher”  

‘Identifying’ such stocks does not mean buying full blow. One can start with 15% and have the mindset to collect the full quota in the next 18 to 24 months in 8-10 installments. This is the time frame of an average bear market. As on date, we are at 2 months. Yes, let us accept that we are in a Bear Market, not a bull market correction.