These 12 Stocks Are in the Greed Phase of the 8-Year Cycle

Sep 4, 2020

Apurva Sheth, Editor,Profit Hunter Pro

Over the last two weeks, I talked about the eight year cycle in the Sensex.

Your feedback to my videos has been great. Please keep your comments coming in. I love to hear from you.

Now some viewers weren't convinced about the 8-year cycle. Specifically, they didn't think it could be applied to stocks.

So in this video, I'll show you how the 8 year cycle applies to 12 individual stocks.

I hope you find this information useful for your trading.

Hi, I'm Apurva Sheth and I welcome you another edition of Fast Profits Daily.

So friends, over the last two weeks, I have been talking about the eight year cycle in Sensex, and the feedback to these videos have been absolutely fantastic. There have been many comments and likes on the videos. Now it's absolutely fantastic when you write these comments, share your thoughts and views about the videos that I record. So do keep them coming. I may not be able to reply to each and every comment that you make, but I do certainly read all the comments that are there on the videos and try to make adjustments and gave you a feedback and implement them in my videos.

So now I am sure that most of you have, like videos than I have recorded in the last two weeks, especially about the eight year cycle in Sensex and how this can have an impact on your trading and investments. Now I know that most of you agree with what I have said in these two videos, but I am sure that there are some sceptics as well, and it's absolutely okay if there is some scepticism in your mind. When I came across these cycles, even I was a sceptic and it took me a time to accept them.

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But when I kept on digging more and more and when I found out more and more data which was agreeing with this view, I started believing in them and I am sure that once we are through with this today's video, there will be a lot of more believers than there are sceptics. So let's get started.

 

So now here on your screen, you can see the chart of Sensex, the long-term chart of Sensex. It's a monthly chart with the eight year cycles marked in it. Now, as you can see, I marked the greed phase face in green. In the greed phase the Sensex tends to move up, and in the fear phase, which is marked in red, the Sensex tends to consolidate.

So here, as you can see, in 1992 the Sensex moved up by 469%. In the fear phase of 2008 ended flat with just gains of 20%. After 2008 it moved up 271%. In the fear phase of 2016, it moved up by 48% and now we are in the greed phase which will last in 2024. So far the Sensex is up by about 50%.

So in the last week's video we saw what kind of sectors participated in these phases. So we saw that all economy stocks generally tend to do well in the greed phase. So in the year 92, we saw that cement and textile companies did well. In the fear phase of 2000 tech stocks, telecom, media and technology stocks did well. They were called TMT. So these stocks did well. In the greed phase of 2008 infrastructure, metal and power companies did well. In the fear phase of 2016 consumption stories, was what was going around. Consumption stocks did well. Technology stocks also did well. In the greed phase once again, chances are that old economy will do well.

So now in today's video, I'd like to share 12 stocks which have gone to these cycles. Now these 12 stocks have at some point or another been in the Sensex or are currently in the Sensex, are constituents of Sensex and I'd like to show you how each one of these stocks have gone through these 8-year cycles and once you through these stocks, I am sure that as I said, you would believe in 8-year cycles. So let's get started.


So here the first stock is Tata Steel. As you will notice, the stock moved up by 502% in the year 1992. It ended lower by 77% in the year 2000. In the greed phase of 2008, it moved up by 1253%. In the fear phase of 2016 it dropped by 57% and we are currently in the greed phase of 2024. Initially it had moved up drastically and then after the rights issue, the stock dropped lower and it's now recovering.

So there's a lot of ground to cover. As you know, we are talking in terms of eight year cycles. So eight years is a pretty long period and they can be lots of ups and downs during the eight year period but what we are looking at in each of these stocks and Sensex is the point to point returns. So the cycle starts on the April of these years. So what we are looking at is a return from say April 2008 to April 2016. So from a point to point basis, we are seeing that in this case, Tata Steel, the returns were negative 57%. So in the year 2024, in this eight year cycle, let's see what's the return for this stock.


So next stock is Tata Power. It moved up by 737% in the year 92. In the fear phase of 2000, it dropped by 66%. In the greed phase of 2008 it moved up by a drastic 2880%. In the year 2016, it dropped by 48% and right now we are in the greed phase of 2024. So let's see what happens next.


L&T same story repeats. 296% in 1992. Negative 15% returns in the fear phase of 2000. In the greed phase of 2008 where infrastructure, power stocks were doing well, L&T did phenomenally good, with returns of 2473%. In the fear phase of 2016 it consolidated and the gains were just 25% and we're in the greed phase of 2024. So let's see how it does.


Siemens, another capital goods stock, did very well in 92, 458% returns. It dropped by 29% in the year 2000. In the 2008 cycle, it did very well, with returns of 1738%. In the fear phase of 2016 it was generated gains of 99%. Now there are some people who say that if it's in the fear phase why is moving up?

Now there isn't a hard and fast rule that a stock cannot move up in the fear phase. There are some exceptions, but what we are interested in is how is their performance in the greed phase and secondly, what kind of returns is it giving in the fear phase compared to what it did in the greed phase. So in this greed phase of 2008, it moved up 1713%. Now, in the fear phase of 2016, it moved up by only 99%. Now this is very less compared to what returns it generated in the previous greed phase. These returns are spread over eight years. So after holding eight years, the stock could only double. So that would be less compared to what it did its previous cycle.


So the next stock is Indian Hotels. Same story. 391% gains in 1992. 41% returns in the year 2000. 490% gains in 2008. Negative 2% returns between 2008 and 2016.


Now, ACC. ACC is a stock which did very well in 1992. As I told you earlier, the greed phase of 92 was primarily dominated by cement and in textile companies. So during that period, ACC was up 2115%. In the year 2000 and dropped by almost 50%. In 2008 it moved up by 446%. In 2016 it was up by 90%


Grasim same story again. 409%. minus 36%, 567% in 2008, 115% gains in 2016 and we are in the greed phase of 2024.


Century Textiles. These are again the same stocks which keep on repeating their cycles again and again. So they tend to do very well in the greed phase and bad or comparatively poor in their fear phase.


Tata chemicals, same story once again.


Hindalco, again a metal stock, did well in the greed phase of 92 as well as in the greed phase of 2008. Now, once again, we are in the greed phase.


Vedanta, a delisting candidate. Now I can understand why the promoters want to delist the stock because there is an opportunity for the entire metal sector to do well in the coming 3 to 4 years.


So last but not least, its Reliance Industries. So Reliance Industries has been changing with the changing times. So in the greed phase of 92, it was more of a textile company. In the greed phase of 2008, revenues were dominated by oil and gas and petrochemicals segment, and in the year 2024, it's evolving. Retail, telecom, all these segments are have also started contributing to the company's top line.

Nevertheless, the greed and fear cycle still remain valid in the stock as well. As you can see between 1992 to 2000, the stop moved up by only 93%. Between 2008 and 2016, it was down by 25%. So as you can see, I have shared with you 12 stocks which have gone through these greed and fear cycles. Now I am sure that who so ever were sceptics before this video started, are now thinking in their minds whether they should be on the side of scepticism or they should accept and believe in the cycle and use this cycle in their investment process. I think if you use the cycle in your investment and training process, then it will benefit you a lot.

So with that, I'd like to conclude with a fabulous line by Theodore Roosevelt, 'The more you know about the past, the better you are prepared for the future.' So that's all from me for today. I hope you enjoyed watching this video and in case you did, then please like it, share it, share this video you're your friends and family members who want to become better traders.

Also do join our telegram channel where I post regular updates about markets and I share my insights there as well. So do join our telegram channel. Thanks a lot and have a nice day.

Stay safe and have a great weekend!

Warm regards,


Apurva Sheth
Senior Research Analyst, Fast Profits Report
Equitymaster Agora Research Private Limited (Research Analyst)

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7 Responses to "These 12 Stocks Are in the Greed Phase of the 8-Year Cycle"

Yuvaraj

Sep 9, 2020

Nice to follow

Like 

N M R Shreedhar

Sep 5, 2020

Hi , Apurva , interesting video. I hav a question though - during 2000-2008 the economy was growing tremendously and hence the marke did extremely well too- would be interesting to look at data during this greed period and compare how the stock did relative to the Sensex ómay throw up some surprises ! Thanks

Like (2)

Venkataseshan Sundaram

Sep 5, 2020

Very nice and succinct observation of the cycle, Mr Apurva
I have few doubts. Whether this cycle applies for selected few stocks or is this a general phenomenon? Does this mean that one should be prepared to invest during the end of the fear cycle to obtain the benefits of the greed cycle? Even though it is good to know from the video about such cyclical trends, how one could predict other than year based cyclical changes?

Thanks
Venkat

Like (1)

PREMKUMAR R

Sep 4, 2020

Very good insight and the list of stocks is also very welcome. The quote from Roosevelt was very apt. Look forward to more recommendations from you.

Like (1)

Joseph chacko

Sep 4, 2020

Very informative insight.thankyou.

Like (1)

PRANAB KUMAR PATI

Sep 4, 2020


i liked your video chart showing greed fear phase.all are good, INFERENCE-ONE SHOULD BUY OR SELL AT THIS PHASE?

Like (2)

Gaurang Dalal

Sep 4, 2020

Long back, in one of your articles, you had explained that when old age or traditional stocks (like Tata Steel and L & T) are in greed phase, the new economy stocks (like I.T.) are in bear phase and vice versa. So, according to you, I.T. stocks should be in fear phase. In fact, you even justified the fall in Infosys (when some employee accused management of internal misappropriation) that the reason is immaterial and the fall was coming as Infosys was passing in the fear phase.
However, subsequently, the I.T. stocks have had a great great run recently. So, now, according to you, what is your prognosis for I.T. stocks in the next four years?

Like (3)
  
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