The Big 🐂 run is still ahead!

I guess I’m the only one in my circle who’s convinced that what we have seen in the markets in the last one year is nothing and a mega Bull Market is still in it’s infancy. This viewpoint was also voiced by the great RJ in his latest interview and let’s see why!

A Bull Market is a period of prosperity,joy and riches. It’s a period where outsized gains are made by the believers and by the time it’s over, there is a significant difference in networth of the ones who benefited vis-a-vis the doubting Thomases. RJ went from a crore to 100crore in 1992, and so did Ramdeo Agarwal who went from nothing to 30crores in the same period. Companies worth next to nothing became household names and a new breed of investors made mark in the markets. So did the 2003-07 market which made an entire new set of India Bulls very, very rich. RJ became the legend he is while Ramesh Damani, Ramdeo Agarwal and all others turned everything they touched into Gold. Moral of the story is- a Bull Market is extremely beneficial to your networth.

So what’s happening currently. People who made money are doubting the sustainability of this run, the guys looking at economy are out of the market and every Tom dick and his brother are predicting Market topping out, not tomorrow but yesterday. Newspaper headlines, Twitter etc is filled with news of imminent crash and everyday when the market falls, people sigh a sense of relief. This is the typical syndrome of second stage of the Bull Market- Skepticism.

Bull Market climbs the wall of worry at every stage. Even from the absolute bottom, we’re only up 2x on an index level. if we study the previous markets, every mega run ends in 4-10x on the index level in two-five years. Our Sensex went from 700-4500 in two years in 1990-92 and from 4000-20000 between 2003-07. The market I believe we’re going to replicate most closely is the Sensex run from 2003-07 and the American great run of 1980s when Dow went from 1000-11000 before topping out in 2000! There are eerie similarities between then and now.

1980s was preceded by horrible times in America. High inflation, Oil shortage, recession of 1970s had all but predicted the death of equities( an eponymous article came out in Business Week in 1979!!!) Cut to 2002-03 in India- Kargil war, three years of failed monsoon and severe market correction. Sensex never crossed it’s high of 4500 made all the way back in 1994! Everyone had given up on Stocks! The markets and economy made simultaneous bottom. What followed was the glorious bull run which led to multi years of prosperity and riches. US won the cold war while India went from a third world country to a Trillion Dollar economy!

Coming back to 2021, India! COVID-19 killed the growth story, markets collapsed and people ran for cover. Headlines still predict the third wave and people would rather want the markets at 10000 Nifty than 20k Nifty! Come-on guys, history rhymes and is making all the noises to grab this opportunity and change your lives. People are making money and still doubting it. The 🐂 is still a young calf! We’ll see this grow into a multi year mega run which can propel nifty to 25-30k( maybe more) before topping out.

Just a few examples. Bajaj Finance was available less than 200 ten years ago and is up 30x from there. TTK prestige is up 15x, Nestle is up 6x, Eicher went 15x before correction. So if you would have listened to economists and experts in 2009, you’d have certainly not bought any of these. Ask yourself, would you have bought Bajaj Finance at 500 after it had doubled in three months? The answer is No. You’d have said, I’ve seen it at 300, and I’ll again buy it thereabouts. So you’d have seen it crossing 800,1000,3000 and all the way to 6000!

Now come back to BSE. It crossed 1200 for the first time in its history this month. People who’ve seen it double in three months want it at 500. It might go there but it might also double from here before correcting 40%. That will also mean it’ll be 1500! I don’t know when it’ll top out. People have been predicting Amazon’s top for 10 years. It’s nonsense! It may or may not happen but by the time it does, you’d be so poor to even think of buying.

A 🐂 run is always followed by a 🐻 market. However, if something goes up 10x and corrects 40%, it’s still up 6x! That’s the point most are missing. Nifty can very well correct 40% someday, but what if it goes up 3x from here before that? Think about it!