The greatest investor of all-time Warren Buffet quotes, “Be fearful when others are greedy and be greedy when others are fearful.” Simply put, that means when most of the people are caught in the fascination of the market boom and invest at high valuations, we should be fearful and when there is fear in the market and everyone is sitting on the verge of selling that is when we should find an opportunity to invest.
When we read the philosophy of the successful investor Peter Lynch says that a market crash is most often a gift. If there is a crash in the market then it’s your point of view that will decide whether it’s an opportunity or trouble? Even the word impossible if read properly, says ‘I am possible’. Even a closed watch/clock tells the right time twice a day.
It is easier to trade in the share market when the market is in the uptrend. Even when the market is bearish, some stocks perform well. So how to trade or invest when the market is bearish? Let us find out in our todayʹs blog.
How to carry out proper analysis when the share market is in a downtrend or the market is crashing from a higher valuation? Let us understand with the help of an example. If we analyze the market data till February 2021, after comparing the price of the shares along with the earnings of their respective companies, we find that even though a crash has taken place; fundamentally, the share market valuation is still expensive. If we analyze the share market technically, i.e. if we analyze the momentum chart, we find that in the short-term the share market is forming a graph similar to stairs moving downwards indicating that the momentum of the market is negative.
When the market is in downtrend/bearish, which are those stocks that are shinning and providing an investment opportunity? Currently, when people are facing a tough time as well as when we are in the initial phase of vaccination, which is that company that is a market leader in providing cold storage facilities to store this vaccine and further help in making this vaccine available in the nook and corner of the country? The name of that company is Blue Star. On one side the market is in a downtrend, and on the other side, the chart of this company is indicating an uptrend. When the market is in a trouble, this share on the other side is providing an opportunity.
We would like to give a piece of advice here for educational purposes. So if have made money from the market earlier or if you can afford to take the risk, you can invest in this company called Blue Star. As the market valuation is expensive, make sure to invest less. If the business model is excellent and just because of temporary trouble there is a fall in the price of the share of a company, then it provides a good opportunity for you to invest there. We have already uploaded a blog on this topic, previously, do check it out if you haven’t yet.
Also, in that blog, we had educated you about the stock of IRCTC. If we analyze the data of that share from that time till date then we find that the share has given excellent returns. In this period of a bearish market, if we analyze the chart of that share we find that this share is a shining star. Through IRCTC, earlier we used to book the train tickets but soon we’ll be able to book the bus tickets as well. So in all the customer base of the company is increasing, also the company earns an excellent return on capital and as soon as this tough time will pass, the company’s top-line, as well as the bottom-line, is expected to boom. Again, we would like to give a piece of advice here for educational purposes that if you wish to you can invest in this share. As the market valuation is expensive, make sure to invest less.
The share market crash often provides an opportunity to invest and we can plan to form a pyramid of our investment in the companies having a sustainable competitive advantage. So which are those shares in the share market that are in uptrend according to their chart structure, if you wish to know then head to our app Aryaamoney. In that we have a program called Smart Trader Training Program, if you wish to you can subscribe to it.
Also, if you wish to create a pyramid of your investment be it a lump sum or SIP for long-term in the market based on the market valuation or if you wish to know how your portfolio should ideally be then you can also subscribe to our exclusive service Wealth Compounding Machine if you wish to.
If you wish to open your Demat account with India’s leading brokers, then you can check out the link given below. We would like to give a disclaimer here that all the advice given in this blog is for educational purposes. This is not any kind of buy/sell recommendation. We may or may not have our investment in the companies discussed here. Mr. Bhuushan Godbole, his company as well as the director board of the company has crores of investment in the share market as well as in gold and silver. This is our disclaimer/disclosure. So we’d like to mention this again that invest in the market after thorough analysis and also after discussing it with your financial advisor.
When you are facing a tough time or when the market is in downtrend, we must remember one thing and that is, “This too shall pass.”
Until next time…
Happy Trading, Happy Investing!!!
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