Bulls vs Bears

  • Bulls charge their way up, while Bears grind their way down. The bull market rallies are generally sharp & steep, while bear market corrections generally are slow.
  • The turn of bull market to a bear market is very slow. The turn from bear market to bull market is sudden & happens when the last bull gives up hope!
  • In Bear markets when investors get frustrated because the market gives them hope of recovery & corrects again. Bull markets hardly give a chance of entry as market rallies without a pause.
  • Because bull markets begin at the point of utmost pessimism & because the rallies are very sharp many investors tend to miss good part of the rally. Remember Mar 2009, Dec 2011 & Aug 2013?
  • Bulls are known for stampeding in thundering herds, bears don’t run in herds. They hunt in small groups & don’t make much noise. In Bull market everything rallies & everybody makes money. Bear Markets segregate wheat from chaff. In bear market corrections happen one sector, one stock at a time & not everything corrects at the same time.

 

Each stock, each sector, each commodity, every mutual fund & every asset class including real estate pass through bear & bull phase. Some have smaller cycle & some longer cycles. But this applies to everyone.

 

Here are some quotes from renown investors about bulls market & bear market:

 

  1. The boom & bust were normal – just two more swings in the stock returns over the past century. Reversion to mean is the iron rule of financial markets. –John Bogle.
  2. In life & business, there are 2 Cardinal sins. First is to act precipitously without a thought & second is not to act at all. – Carl Icahn.
  3. The four most expensive words in the English language are, This time it is different. –John Templeton
  4. With every new wave of optimism or pessimism, we are ready to abandon history and time tested principles. But we cling tenaciously and unquestioningly to our prejudices- Benjanmin Graham.
  5. Stock market is a story of cycles and of human behaviour that is responsible for over-reaction in both the directions. – Seth Klarman
  6. If past was all that was there to the game, the richest people would have been librarians. – Warren Buffet
  7. Even the intelligent investors are likely to need considerable will power to keep from following the crowd.- Benjamin Graham

 

 

Market Emotions in a full market cycle:

CycleOfMarketEmotions

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