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The market cycles between greed and fear every 8 years!

The first greed phase Sensex ended in April 1992, with gains of 469%. (gains are calculated from January 1990 as prior data isn't readily available) 

The Sensex then entered a fear phase and stayed there for the next eight years. Over this eight-year period Sensex moved up only 20% till April 2000.

Then, it entered the greed phase once again and stayed there till April 2008. The gains for Sensex during this period were 271% and Nifty during this period were 298%.

Sensex & Nifty stopped hitting new highs and the greed phase was once again replaced by a fear phase 8 years later in April 2008.

Sensex & Nifty traded with high volatility just like it did in the last fear phase and by the end of eight years it was up only 70% by Sensex and 72% by Nifty. The fear phase ended in April 2016.

The Indian market is now in the greed phase which will last till 2024.

So far, the Sensex & Nifty both is up more than 47% since April 2016 and there is a long way to go.

  • 1990 to 1992 greed phase gains of 469% 
  • 1992 to 2000 fear phase fell by 20% 
  • 2000 to 2008 greed phase move up by a staggering 271% 
  • 2008 to 2016 fear phase up by 70% 
  • 2016 to till February 2018 greed phase so far up from enter in greed phase just only 47%.

Let’s make it simple of greed and fear mood of investment purpose…

When the Indian market is in GREED phase you should position yourself for swifter and smaller corrections and bigger upmoves. When the Indian market is in FEAR phase you should position yourself for long and sharp corrections and small upmoves.

But that's not all. There is another interesting characteristic that Indian market follows during these phases. The set of stocks which participate in the rally and move the Indian market during these phases is different and follow a cycle of their own.

GREED phase : Old Economy stocks or brick and mortar companies move the Indian market the most in this phase. (Old economy sectors like cement, textile, metals, power, infrastructure etc.) Stocks from these sectors are from cyclical industries and need huge capital investment.

Another way to look at the old economy stocks is that they are traditional businesses which cater to basic human necessities like - Roti, Kapda, Makaan, Bijli and Sadak.

1992 : Cement and Textile industry 
2008 : Power, Realty, Oil & Gas and Infrastructure 
2024 : Old economy stocks to be select best.

FEAR phase : New age stocks are generally technology driven companies and move the Indian market the most in this phase. These companies are disruptors and benefit the most because of a shift from unorganized to organised business. (New age sectors like telecommunication, media and consumption driven businesses.)

Another way to look at the new age stocks is that they are modern businesses which cater to psychological needs of esteem and belongingness like - branded clothing, jewelry, credit cards, 24X7 connectivity etc.

2000 : Information Technology, Media and Telecom 
2016 : NBFC's, Private Banks, Consumer discretionary

People normally look to the future to identify multibaggers; but look to the past if you want to identify the multibaggers of the future.

Past price action is all you need to study to make money from the markets.

Few stocks are to be part of past GREED & FEAR phase to identify future investment multibaggers…

Tata Steel - an old economy stock, has been a part of the Sensex & Nifty for a long time. Applied the same 8-year cycle which had applied to Sensex & Nifty a while back.

1990 to 1992 greed phase gains of 502% 
1992 to 2000 fear phase fell by 77% 
2000 to 2008 greed phase move up by a staggering 1,253% 
2008 to 2016 fear phase dropped by 57% 
2016 to till February 2018 greed phase going move up 133%.

Tata Power Ltd -  is India's largest private sector power utility company. It has moved in and out of Sensex & Nifty many times. But that doesn't make any difference to us as the price action says it all.

Just have a look at how the stock has moved perfectly across the greed and fear cycles.

1990 to 1992 greed phase gains of 732% 
1992 to 2000 fear phase fell by 66% 
2000 to 2008 greed phase move up by a staggering 2,881% 
2008 to 2016 fear phase dropped by 48% 
2016 to till February 2018 greed phase going move up 49%.

Larsen & Toubro (L&T) - another well-known Indian indices stock from the old economy basket.

1990 to 1992 greed phase gains of 296% 
1992 to 2000 fear phase fell by 15% 
2000 to 2008 greed phase move up by a staggering 2,473% 
2008 to 2016 fear phase move up by 25% 
2016 to till February 2018 greed phase going move up 24%.

Siemens Ltd. - another capital goods stock.

1990 to 1992 greed phase gains of 458% 
1992 to 2000 fear phase fell by 28% 
2000 to 2008 greed phase move up by a staggering 1,738% 
2008 to 2016 fear phase move up by 99% 
2016 to till February 2018 greed phase going move up 21%.

Indian Hotels -  Most people may have forgotten but Indian Hotels, the company which owns the iconic Taj Mahal Hotel in Mumbai.

1990 to 1992 greed phase gains of 391% 
1992 to 2000 fear phase move up only by 41% 
2000 to 2008 greed phase move up by 490% 
2008 to 2016 fear phase dropped by 2% 
2016 to till February 2018 greed phase going move up 46%.

ACC Ltd - If you've been in the markets for long then you know that cement stocks were the darlings of the markets back in 1992.

1990 to 1992 greed phase gains of 2,115% 
1992 to 2000 fear phase move down by 49% 
2000 to 2008 greed phase move up by 446% 
2008 to 2016 fear phase move up only by 90% 
2016 to till February 2018 greed phase going move up 27%.

Grasim Industries Ltd - started as a textile manufacturer and later diversified into viscose staple fibre, cement and chemicals. It's like three old economy companies packed in to one.

1990 to 1992 greed phase gains of 409% 
1992 to 2000 fear phase dropped down by 36% 
2000 to 2008 greed phase move up by 567% 
2008 to 2016 fear phase move up only by 115% 
2016 to till February 2018 greed phase almost double.

Century Textile - Apart from being a Indian indices heavyweight at one point of time, Century Textile is a classic old economy company. It started as a textile player, but later ventured in other segments like cement, chemicals, pulp and paper, and real estate.

1990 to 1992 greed phase gains of 440% 
1992 to 2000 fear phase dropped down by 90% 
2000 to 2008 greed phase move up by 2,054% 
2008 to 2016 fear phase move up only by 27% 
2016 to till February 2018 greed phase almost double.

Tata Chemicals - Here's another stock which has moved perfectly through these phases over the years - Tata Chemicals. It is the third largest soda ash producer in the world.

1990 to 1992 greed phase gains of 336% 
1992 to 2000 fear phase gain by 73% 
2000 to 2008 greed phase move up by 726% 
2008 to 2016 fear phase move up only by 14% 
2016 to till February 2018 greed phase has moved up about 50%.

Vedanta Ltd. - Here's a natural resources company - Vedanta Ltd. It is a conglomerate born out of merger of three major companies - Sterlite Industries, Sesa Goa, and Cairn India.

1990 to 1992 greed phase gains of 1,710% 
1992 to 2000 fear phase dropped by 92% 
2000 to 2008 greed phase move up by 15,180% 
2008 to 2016 fear phase slipped only by 51% 
2016 to till February 2018 greed phase more than double after it entered the greed phase.

Hindalco Ltd - Here's a metal company one of the old economy.

1990 to 1992 greed phase gains of 362% 
1992 to 2000 fear phase dropped by 63% 
2000 to 2008 greed phase move up by 192% 
2008 to 2016 fear phase slipped only by 45% 
2016 to till February 2018 greed phase more than double over the last 23 months.

Bombay Dyeing - was also a part of the Indian indices at one point of time. Back in 1992, textile companies dominated the Sensex.

1990 to 1992 greed phase gains of 519% 
1992 to 2000 fear phase dropped by 91% 
2000 to 2008 greed phase move up by 2,363% 
2008 to 2016 fear phase slipped only by 76% 
2016 to till February 2018 greed phase and it is already up 455% but that doesn't mean it can't move up more till 2024.

Aban Offshore - Now here's a stock which wasn't a part of the Indian indices ever, but the 8-year greed and fear cycle is compelling enough to share it with you.

1990 to 1992 greed phase gains of 734% 
1992 to 2000 fear phase dropped by 94% 
2000 to 2008 greed phase vengeance move up by 1,00,109% (yes you read right in just 8 years) 
2008 to 2016 fear phase slipped only by 94% 
2016 to till February 2018 greed phase and its up by 24%

Our India Indices (Sensex & Nifty) will may be cross more then 300% returns in current GREED phase (Yes remind you again we are in GREED phase - bull side).

Top 2 mutual fund (return will get 15x to 18x in this phase) and 14 top stocks(more then 3,400%, 2,100%, 400% returns will get) of old economy as well as Technology stocks recommended to members but you need enter in right time with right price.

Well, nobody can say that for sure but if past price action is anything to go by then these old economy stocks should be on your radar.

You never know which one could make you wealthy. And these are not all. There are many more old economy stocks which were once a part of the India indices and have perfectly moved through the greed and fear phases over the years.

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Comments 3

Raghav Kabra on Thursday, 24 October 2019 11:29

Sahyog Multibase is transforming into a leading agro Chem company by merging with unlisted Best Agrochem, leading player in pesticides etc in India & abroad.
Merged co to have 700+ cr topline from current 128 cr; New company to be renamed Best Agrolife; Stock on fully diluted basis is trading at 0.8x Price-to-Sales vs peers at 3-6x; Could be multi-bagger in the making!

Sahyog Multibase is transforming into a leading agro Chem company by merging with unlisted Best Agrochem, leading player in pesticides etc in India & abroad. Merged co to have 700+ cr topline from current 128 cr; New company to be renamed Best Agrolife; Stock on fully diluted basis is trading at 0.8x Price-to-Sales vs peers at 3-6x; Could be multi-bagger in the making!
Divyanshi Sharma on Monday, 11 June 2018 13:41

Very well said!! thia shows your deep analysis and confidence about stock market.

Very well said!! thia shows your deep analysis and confidence about stock market.
Investinstocks.in on Monday, 11 June 2018 16:50

Thank you!

For more details can be contact on [email protected]

Thank you! For more details can be contact on [email protected]
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Wednesday, 20 November 2019

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