MARKETS

Vijay Kedia stocks: Is this the beginning of a bear market? Vijay Kedia demystifies Mr Market’s mood

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Is the ongoing correction just a pause in the bull market? Or are we at the cusp of a bear market? This debate reminds me of the story of the elephant and the six blind men trying to figure out what the giant looks like.

Nobody knows what a bull market and a bear market are. Everyone defines phases in the market according to their own positions and how their portfolios are performing.

For example, many bluechips have corrected 20-25 per cent from their recent highs. Even good cement companies have gone down 20-30 per cent from their recent highs. Those who have positions in such stocks will think that this is still a normal bull market where 20-30 per cent reaction is quite normal.

In the mid and smallcap segments, there are many stocks that have fallen by 50-70 per cent. If you are invested in those pockets, it would be nothing less than the 2008 bear market that began after the Lehman Brothers crisis. On Wall Street, new-age stocks have fallen by up to 80 per cent. Many of them may not get to see their recent high for the next 5-10 years, and in some cases, never.

If you are an investor in midcaps, you will feel like you are already in a bear market that is 4-6 months old. You will find a lot of shares in BSE500 that are down by up to 50 per cent.

In many pockets of the market, the bull phase ended 6 months ago. In the bull market that started after the crash in March 2020, many stocks went up several times. It is absolutely normal for them to see a correction of 20-25 per cent after scaling such record highs.

The fathers and grandfathers of bull markets are always followed by fathers and grandfathers of bear markets. To every reaction, there is going to be an equal and opposite reaction. However, the gravity might be different.

Now that the Nifty is making lower tops and lower bottoms, retail investors are realizing that we might be at the cusp of a bear market. War is just an excuse now as the fear of inflation was there 6 months ago as well.

The history of the last two decades shows that bull markets are getting longer and bear markets are getting shorter. By the time you realize it is a deep bear market, certain stocks may already be nearing a bottom in some cases.

In the last 2-3 months, retail investors have lost all the money they have earned in the last 2 years, after Covid began. Even the stocks I bought after Covid in 2020 went up by 5 to 10 times but then slipped down 25-50 per cent. But if you had bought any stock in 2021, then you might be at a huge loss.

If you are thinking of timing a bull market or bear market, you are just wasting your time. Look at individual stocks and make your positions accordingly. Study the growth prospects of the company you are investing in. Stay out of sunset sectors at any cost and stay in sunrise sectors at any cost.

A bull market is like a pizza. By the time it reaches your home, it is not hot anymore. You don’t know when it comes and turns cold.

But don’t forget that just like the sun is always shining somewhere on the earth, a bull market might be on in some part of the stock market. The market is as vast as the sea, and is rough in one part but calm in another part.

Therefore, it is neither a bear market nor a bull market. It is just the stock market.

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