In 2018, I had identified the top quite well and exited a lot of stocks I used to hold also. And still manage to lose nearly 40% of my portfolio. Reason was that I ended up buying small and midcap stocks that had corrected a lot during that time and even after my buying, they corrected even further. And I ended selling at the wrong time. Post the correction of 2018 , the place to be was the so called “quality” stocks which went up very well and all this while small and midcaps languished.
The charts you have drawn do depict possible top formations, but when markets are in strong momentum, you get caught in the moment and many a times things clearly written on the wall become difficult to decipher.
I did have the knowledge of technical analysis at that time too, but did not rely so much on technicals as I do now. So maybe you have a case for that. But I clearly identified froth in small and midcaps in the rallies preceding the 2018 correction. I think I might have put up a note to that effect on this very thread at that time.
If you see current markets, we have had so many close calls in the past couple of years where one could have gone totally into cash, and in the process managed to miss wealth creating opportunities.
However that does not mean we should not try to be on the lookout for major market tops. If something of a warning sign is visible on the charts and it concides with excessive froth in a stretched market, then there can be a case for going into cash.
CDSL chart has already been discussed on the 52 weeks high thread.
@mzambare Warren buffett has described circle of competence, which is to restrict oneself to sectors and companies one understands while investing. But as investors we need to widen our circle of competence and try to learn as much as we can about other sectors too. Best book to learn how to analyse a particular sector is Five rules for successful investing by Pat Dorsey. He describes in details about how to analyse particular sector and has covered most sectors that matter. There is no short cut if you are into investing Till date I have not found any alternative to good books. These days a lot of wannabe investors want to listen to YouTube videos on certain topics and try to go full throttle on investing. This does not cut much ice with me because in the first place the credentials of the guy making the video are not established or clear. Whereas books written by well known investors who have good track records behind them are worth their weight in gold.
Subscribe To Our Free Newsletter |