Or, turn bullish for the right reasons.
I was watching the TV this morning and was struck by the tremendous chorus of bullish views pouring out of it. All the big names were there- either domestic or foreign. Those who had bought crowed about it, those who missed said inane things like “ structurally we were positive” . Mid caps are suddenly “value” never mind the fact that they have spurted 30% from the recent lows. “Policy continuation” is expected no matter who comes to power. Those who do not wish to be pinned down say things like “broader market will go up” or stuff like “ valuations are not expensive”. Point is, all statements are laced with bullishness. This is classic sentiment bias and guilty of linear thinking. What has happened in the recent past is what most of us expect will happen in the future. Add to this the fact that all of us own stocks and want the market to go up. Hence anything that appears to support that possibility is what we will seek to embrace! Does anyone want to take a stance that there will not be a fractured mandate? I doubt. However, is that even being mentioned anywhere? Even those who feel this way couch their words in some nonsense like “ markets shall be sensitive to election outcome”.
However, the general public, which watches all this then begin to develop and mould their own views along the bullish sentiments that one keeps hearing and seeing on TV. In addition we are now reading almost every day of different statistics on how various indices are performing or how the mid and small cap is doing. These statistics are also all laced with bullishness which is the current sentiment. This once again influences the mindset of the retail trading set. By now however, the indices have rolled along and are 10-30% higher from where they were and by most natural yardsticks, ready for some pullback. Is it any wonder then that retail traders enter the market as it is now beginning to appear that the bulls are here to rule- after all, those experts on TV and all those articles in the papers cant be wrong, can they? It will be the exact reverse case at the bottoms too.
I have no doubt that the market cycle turned to the upside way back in Aug-Sept of last year and have said so in my newsletter as early as Sept 5th,2013. We do need to be bullish but for the right reasons. Right now I think people are turning bullish for all the wrong ones. The media is a play tool in the hands of those who are large enough or powerful enough to mould it to their needs. Unfortunately people believe the media more than they should.