Continuing to my earlier post about psychology / mindsets.. all thoughts are my personal views & observation with my theory & speculation so take them with a pinch of salt…
Post hoc, ergo propter hoc – Latin for “after this, therefore because of this”, is a logical fallacy.. reason come each time justifying cracks..
Every bull run will have very strong companies, best of India leading the bull run.. then there will be a bunch around these.. 1st group will show lot of potential & make big moves, lot of media will dance around them… the next multibagger type.. & then the 2nd raddi category with almost no potential..
How does it work.. I have seen enough of these sets in my 20 years of trading to know it cant be just coincidences..
lets start with the Strong blue chips: these are the Infy, TCS, Wipro, Larsen, DRL, RIL, Bajaj group,etc. These will already have moved up in their respective bull market multi fold even before you realize there is a bull market.. they still remain buy on dips in latter part of bull market but usually most retail will not touch them except for small trades, but its these which will keep moving up the entire bull market… though even after bull market of that sector ends these, after some bigger consolidation, will again pick up…
Then comes the 1st category, the HFCL / GTL / Punj / Yes / DHFL / etc.. this is the favorite of every punter during the bull market.. they will have wild moves & during bull market mid to last stage will run up big in short time… most traders will wet their beaks in these run up & love these fast profit givers.. they will get addicted to them… sadly its these stocks which most retail will decide are the next multi baggers & great investments at the fag end of the bull run.. its these stocks which will loose mostly 90% value from their peak and collapse. They will keep giving sharp bounces during the fall also to keep alive the hopes of retail investors.. After the major collapse eventually in the next bull run they most likely will retrace maybe 50% of the fall, bring back hope in retail portfolio again.. eventually they will sink again.. hardly 1 or 2 of them will come back to previous glory and rise above..
Last but not the least, the 2nd category I call them the poor man’s stocks ! These are the cheapest stocks in those sectors.. When the fire moves are on in 2nd category many will buy these cause they are cheap & retail will expect them to catch up one day.. some day.. they never do except some sharp moves at end of every big rally in market.. eventually retail gets fed up of these and jump to category 1 in fag end…
End of Rant !
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