Time to Review 2020 – Things have got so bad, they can only get worse…⁉️

Greetings !!

We, Stock Market Participants, are in the middle of an information war. And, mind you The Market is not stupid; But We are.

Here a fact told in form of the Story…

If you catch 100 red fire ants as well as 100 large black ants and put them in a jar, at first, nothing will happen. However, if you violently shake the jar and dump them back on the ground the ants will fight until they eventually kill each other.

The thing is, the red ants think the black ants are the enemy and vice versa, while in reality, the real enemy is the hand who shook the jar. This is exactly what’s happening in Stock Market today.

Those Red Ants & Black Ants can be replaced with various conflicting / counter Market Participants. Namely,

FIIs vs DIIs,

Institutions vs Retails,

Buyers vs Short Sellers,

Fundamental vs Technical, likewise many combinations are possible. Be creative. That’s all.

At the end who wins – the hand who violently shook the jar. Got it ‼️

Time to Review 2020:

ASK Yourself, What has worked in 2020… 

Here is some basic Information / thoughts to help you in answering the above Question.

~ FIIs sold at & below 9000 levels back in March 2020 and now FIIs buying at & above 12000

~ Fundamental Analysts scratching their head how can advise BUY at such a elevated levels

~ Technical Analysts – how can a normal correction of 500pts in NIFTY50 become elusive

~ Short Sellers rejoicing March 2020 and BUYERS having good times from August 2020.

At the end who wins – the hand who violently shook the jar. Got it ‼️

Super Bull Market vs Super Bear Market – January to November (ELEVEN months) of 2020

12430 to 7511 and back to 13250.30 which means 11,000pts Movement from point to point.

If one counts Intraday Price Swings then this tally of 11,000pts can easily become 30,000pts.

For those who thinks that stimulus package is helping Markets to make new high then think for once, those who can make you believe extremely unreasonable thing, can make you commit shockingly bad trade / investment in Stock Market by just shaking the jar.

Here are some of the Extremely Unreasonable things going on at present,

  1. By the end of 2021, $8.5 trillion of US Treasuries will be maturing
  2. The US economy, at present has $77 trillion of public and private debt
  3. USA Federal budget deficit hit record $3.1 trillion in just-ended fiscal 2020
  4. US airline sector has an $80 billion market cap, and Zoom has $140 billion market cap
  5. At it’s all time high levels, Apple’s market cap ($2tn plus) almost equivalent to UK FTSE index ($2.2tn) and Exceeded the Entire Market Cap of Russell 2000 (RUT)
  6. Over the past 10 years, US corporates have spent around $9.2 trillion buying back their stock – money that wasn’t spent on building new factories, infrastructure, products or creating jobs… but boosting the bonuses of executives and dividends to owners…

For those who thinks that Covid-19 Vaccine is helping Markets to recover then please refer NewYork Times article dated 3rd December 2020; in-spite of that yesterday only S&P500 made new High.

Markets are forward-looking therefore we have to be… 

Our Losses of DLF, HDFCBANK, BHEL, HAVELLS and BHARATFORG has taught us many valuable lessons therefore we have understood the Problem, so started rectifying mistakes to find long lasting solutions.

For Example: Earlier, We used to do all the calculations by 

  1. by taking NIFTY50 yearly range of 3000pts
  2. by assuming that Bear Markets last for at least 12 months
  3. by understanding that Fundamentals do give us Tops & Bottoms

P/E’s don’t matter anymore because of Governments Bail Outs, intangibles accounting gimmicks, share buybacks, Central Bank & regulatory bodies interventions, etc.

Relatively, we survived in 2020, as we had rigorously followed the old Market saying, that is,

“Never trade without knowing where you are going to sell if you’re wrong, and if you’re right.”

Rocket Trades focus is to minimize Your potential losses and maximize the Profits given all the Market Conditions by Research, read, learn, and prepare.

Thanks for Reading… 

Rocket Trades

Call, Text: +91 99003 30558

Nilesh Jain, Trading Counselor

SEBI RA: INH200002978, Bengaluru

E-Mail ID: Rocket@RocketTrades.com

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