We have had a stellar rally ( and still continue to see) in small and midcaps in Indian markets and as of now there are no signs of letting up. But as you say, at some point of time in the future, inevitably this rally will take a pause , or reverse completely.
My aim usually is to make the most of such strong bull markets, so that when correction happens, giving up part of gains is not too painful. For that to happen, I have to ride the rally to the best of my ability in the strongest stocks in strongest sectors, with proper allocations.
While we must be watchful with respect to signs of correction, it’s often difficult to make a strategy beforehand as to how to deal with a correction in the future. Market corrections take different shapes and sizes. If these are routine bull market corrections, then it makes sense to be on the lookout for next sector building up momentum. But if its the actual real deal and big reversal on the cards, it makes sense to sit on the sidelines allow the dust to settle and get a clearer picture. So at the current juncture its difficult to formulate plans of a future correction.
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