Bulls, Bears and Other Beasts

by Santosh Nair

‘Never take huge bets on political events,’ Monk had told me a few days ago. ‘Markets may be irrational, but are far more predictable than politicians.’

This was a worrying sign for the seasoned players because traditionally, bull markets have peaked whenever retail investors have stampeded their way through the bourses.

a bull market does not start till the last bull has given up hope and a bear market does not start till the last bear has given up hope.

‘One sure sign of trouble is when businessmen and traders outside the stock market start heading here, convinced this is the place to make good money. In the right proportion, their investments are welcome, and even good for the market from a liquidity perspective. But the problem arises when they start ignoring their main business and start chasing easy money,’ he said.

It seemed to me that nobody wanted to talk about the possibility of a correction or a fall for fear of being laughed at. I saw this as another sign of irrational exuberance, strengthening my theory that a steep fall would not be long in coming.

Damani’s investment philosophy was simple: no matter how great the business, you had to buy the company at the right price to be able to get good returns.