≡ Menu

The Reality Of Bull Markets

Date: 26-May-2017

Sir John Templeton (1912-2008), one of the greatest investors and mutual fund managers of all time founded the Templeton Growth Fund in 1954. It started in US but was one of the first mutual funds in US to invest in many countries globally. India is also one of them. In India it is the Franklin Templeton India Mutual Fund.

Sir John Templeton once said, “bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”

Nifty from 8000 levels has now today as on 26-May-2017, has reached 9500+ level. This is an increase of 19% in a five months.

NSE Nifty 50 as on 26-Dec-2016, 7908.25:

NSE Nifty 50 as on 26-Dec-2016, 7908.25

NSE Nifty 50 as on 26-Dec-2016, 7908.25

NSE Nifty 50 as on 17-May-2017, 9525.75:

NSE Nifty 50 as on 17-May-2017, 9525.75

NSE Nifty 50 as on 17-May-2017, 9525.75

There are four stages of a bull market – pessimism, skepticism, optimism, euphoria.

I may be correct or wrong but my perception is we are in the third stage – Optimism.

US is in a very dicey stage. There are talks going on for impeachment of US president.

Frankly there is no big news in India and US or any other country of great economic revolution. Is the world or Indian economy 19% better than it was in December 2016? No. It might be better but nowhere near 19%.

It is just optimism or hopefulness and confidence about the future or the success of something that has brought Nifty from 8000 to 9500+ levels.

If you look at history every bull market ended up with a bubble. Especially the stock market crash of 2008, the world bubble after an euphoria. Stock markets all over world tumbled 50%.

Well that will not happen for sure as the world has adopted strict measure to make sure recession does not happen again. Even if recession has not happened this is a place where we can expect some kind of reversal if not bubble.

Here are some important points:

Every time there is a strong bull run, hedge fund positioning and investments becomes a major headache for stock markets.

Before the stock bubble or 2008, hedge funds had overbought tech and banking stocks. Once the bubble hit, both the tech and banking stocks tumbled bringing the stock markets the world over down 50%.

A recent Goldman Sachs report on hedge funds is showing similar pattern now in 2017. Hedge funds have invested most of the their money in small stocks on top of that they have not invested too much in hedging there portfolios. This is seriously bad news if a bubble hits in.

Since hedge funds invest in billions of dollars, if they start losing money and if not properly hedged the first thing they will so is start taking stop loss. Do not forget that to close their position they will have to sell their stocks.

Basically Sell will overpower Buy. Bears overpowering Bull is a signal of stocks going down.

Once hedge funds crack they have the power to bring stock markets down.

Another problem with hedge funds is that they use leverage to borrow and increase the size of their bet on stocks they hold. Some hedge fund managers are over confident of their investment decisions therefore leverage too much without hedging their bets. As hedging takes money to hedge they do not hedge due to overconfidence.

Once they see any sign on weakness in the markets they sell off all their holdings at once. Here is where is the problem. If all hedge funds sell off then there will be a bubble just like the bubble of 2008. However if the sell off is a few days apart, the markets will come down slowly.

It is well know that hedge fund managers are smartest people in the investing world, but if they do a mistake, everyone suffers.

What I have written above is what hedge funds are doing in the US markets. But do not forget that if US markets fall, Indian markets too follow through.

Disclaimer: This article is based on what is happening in the world of stocks markets especially US. There is no guarantee that we are near bubble or the stock markets will fall. It is based on pure research done by me. I am in no way responsible if based on my articles anyone takes an investment or trading decision. No one can predict the future, but everyone has the right to research. This article is based on my research.

Please like & share my blog with your friends:

Hi, I am Dilip Shaw, owner of this website. I am a trader like you. I have been trading since 2007, but lost a lot of money till 2010. I then stopped trading and studied options like college exams. Started trading again from 2011 and never looked back since. I did a lot of research, read books and did countless paper-trading before being profitable. You can read about me here.

My conservative trading course since 2014 is helping many retail traders just like you who have a job or business make consistent profits like this:

What Traders Say About This Course
Testimonials Year 2015
Testimonials Year 2015 Page 2
Testimonials Year 2015 & 2016
Testimonials Year 2016
Testimonials Year 2017
Testimonials Year 2018
Testimonials Year 2019
Testimonials Year 2020 to 2023
What People Say Just After Reading My Course
Emotional Testimonial by a Young Woman Trader and Her Mother
One Of My Client Is Making Rs.25k Per Week
Difference Between Other Courses And Mine
What Others Charge for Courses

You can do this course from your home. Some traders make amazing profits like Rs. 16.26 lakhs profit in 5 days though results may differ for all.

This course helps you learn to trade conservative option strategies for monthly income. Once you finish the course you can start trading immediately. You can start trading from any day. No need to wait for expiry. You will make profits consistently.

This course is good if you have a regular job or business. You DO NOT NEED to monitor your trades every second.

What You Get?

Before reading please understand that for all 5 strategies, strike selection will be taught. Strike selection while trading Options is the most essential part to succeed.

You get two conservative non-directional strategies on options, one conservative stock option strategy and two conservative directional strategies on Future & Option combination.

Non directional trades are profitable 80% of the times and make 3-5% per trade (Results may vary).

Directional strategy makes money fast. It does not matter which side the stock moves. In fact you make more when you are wrong in the Future trade. 🙂 Some amazing profits possible here.

The stock option trade makes 30,000 in one trade and if SL is hit there is a way to recover losses plus make 30k in that trade.

Technical knowledge is NOT required. No need to monitor trades every second.

In the course you will learn how to select the strike prices. You learn when to trade, which strikes to sell which to buy, how much profit target you should be looking for, the best place to take stop loss and what to do after taking stop loss – means how to get that money back. The success rate is more than 80%.

Since trades are properly hedged there is no stress in trading my strategies.

I am very confident that you will make money trading my strategies. To help you succeed I offer few months support for FREE.

11 Reasons Why You Should Do The Course:
1. TA Knowledge NOT required
2. NO Software Required
3. Regular Monitoring NOT Required
4. Continue with Your Job
5. Do Course From Your Home
6. 100% Hedged
7. Stress-Free Trading
8. Not too much money needed to trade
9. Scaling Possible
10. One Time Fee
11. FREE Support For Months
To know more Call/SMS/WhatsApp me on 9051143004 or email me now. I know English and Hindi.

Read the details of the course here.

If you want to enroll for the course you can do so here.

P.S: So many years of trading has thought me one thing - it is always better to make small profits month after month, rather than lose money month after month trying to make too much money. It never happens. But small money accumulated month after month can become very big in only a few years.

Privacy Policy | Disclaimer

WhatsApp or Call me: 9051143004

If you have any question you can contact me.

You can read about me here and my trading mistakes here.

TheOptionCourse.com Copyright @ All Rights Reserved
Dilip Shaw, Founder

Copyright Infringement: Any act of copying, reproducing or distributing any content in the site or newsletters, whether wholly or in part, for any purpose without my permission is strictly prohibited and shall be deemed to be copyright infringement.

INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However every trade depends on the trader and his level of risk taking capability, knowledge and experience. Moreover stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website.

DISCLAIMER: I am NOT an Investment Adviser (IA). I am an Authorized Person (AP) of a Stock Broker. In other words I am a sub-broker. I DO NOT give tips or advisory services by SMS, Email, or WhatsApp or any other forms of social media. I strictly adhere to laws of my country. I only offer education for free on finance, risk management & investments in stock markets through the articles in this website. You must consult an authorized Investment Adviser (IA) or do thorough research before investing in any stock or derivative using any strategy given in this website. I am not responsible for any investment decision you take after reading any article in this website. Click here to read the disclaimer in full.

10 Percent A Month From Stock Markets Is impossible To Make
The Real Meaning Of Volatility And Its Importance

About the author: I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

{ 2 comments… add one }
  • Geoffrey May 26, 2017, 3:32 pm

    Hi Dilip……. a very thought provoking write-up on “The Reality of Bull Markets”
    Keep up the good work… and such useful articles coming.
    Thanks and Regards

Leave a Comment

Social Share Buttons and Icons powered by Ultimatelysocial