The Nifty Will Soar Past 10,000 Soon - Views on News from Equitymaster

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The Equitymaster Research Digest

The Nifty Will Soar Past 10,000 Soon
Jul 26, 2017

  • The Emotion Grid
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Yesterday I wrote to you about Nifty 10,000 and Sensex 40,000.

The first has been achieved. The second too will be.

Why am I so confident?

I'll be honest with you. My confidence doesn't come from some superior knowledge about the markets. I confess I don't have any secret edge over the rest of Dalal Street.

But I do understand some timeless principles. Here's one of them.

  • Bull markets are born in pessimism, grow on scepticism, mature on optimism, and die on euphoria. - John Templeton

This one sentence tells you all you need to know about market cycles.

Memorise it if you must. You can profit from every bull and bear market if you know the main emotion on the street.

Here's a grid that I find very useful.

The Emotion Grid
Emotion Buy Sell
Pessimism Yes, aggressively No
Scepticism Yes, conservatively Mostly no but consider booking some profits
Optimism Yes, but carefully Yes, book profits regularly
Euphoria Mostly no but consider a few very selectively Yes, aggressively
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