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So hello guys and welcome back to equarch and today we have a very important topic to discuss. Basically we are going to start with a new series video. We are going to talk about a book called mastering the stock market cycles. So basically when we talk about stock market cycles uh if you start with an introduction we understand that there are 20 10 to 20 uh different factors on which the best investors or investors who want to become more better at their investing.
Um they have some checklist points where they have to pay more attention on. And one of the checklist point that is really important and that uh owns a position at the topmost place in the list are the stock market cycles. So basically if we talk about stock market cycles or any cycle it is a behavior or a pattern that occurs naturally and regularly repeatedly in an environment that affects the life and behavior of people.
naturally occurring history tends to repeat itself. We need to understand that if we try to take an example of long time ago when there used to be lot of suns and mahatmas in the country, we used to look them at uh or if we talk about their hairstyles and beard styles, they used to have long curly hairs.
They used to have big beards. With the course of time when the time changed and the trends also changed after a lot of time if we see it back today in the environment we see the uh same trend coming back. We see that people have started liking the big hairs haircut or um people have started liking big beards.
What do we understand with this behavior that the tendencies the psychologies of people they keep changing but they occur in a particular pattern they occur in a particular cycle which could be understood stood by observation of data from the past. So if we understand the examples of uh a cycle we can understand this with if we talk about winter it is more cooler and snowier as compared to summers.
If we talk about day it is more lighter than the night. So when we plan a trip for skiing we try to opt for winter months. If we try to uh plan sailing, we try to do it in summers. If we want to do recreation of or we want to work, we choose the day and we use the night for sleeping courses. Why do you think this happens?
These are naturally occurring patterns and this really affects people, their behavior and their life. We can understand this with one more example. If we talk about human body, you see the metab metabolism in the human body is at its peak in the daytime when the sun rises. Simultaneously when the time goes down, the metabolism or the pace of metabolism also comes down.
Soon as the morning starts coming the metabolism rises and if we try to go against the natural trend of the body after some point of time our body starts resisting it shows implications. So basically we need to go with the trend and we need to respect the naturally occurring trends. Similarly, these cycles and trends they occur in economies, they occur in markets, they occur with stocks, they occur with literally everything.
If we talk about 2008 crisis, financial crisis in India, most of the people thought that the real estate prices are rising and they are going to keep rising. Most of the people they took heavy loans and they did a massive buy of real estate. The bubble burst, 2008 crisis burst and all the real estate prices came down.
Everything that comes up has to come down one day. Everything which is down has to come up one day. very very very very uh connective example is 2020 co we saw 2020 co the day when the lockdown was initiated the day when we saw the effects of covid people didn't gave interest to the markets people panic and they sold off their selling resulted in a big dip in the market most of the investors They did a great buy in this day.
What we observed postco from 2021 to 2024 we saw rapid bull run that was of more pace as compared to what was going on and maybe we can say next 10 years could be the India years. We have lot of sectors where we haven't shown a lot of growth. Most of the people around the countries are coming India to invest as they feel we are the emerging economies.
Developed nations like USA want to invest in India. Evenly if we talk about the Indian markets fi are selling but you see the markets don't feel to tend to fall. Because the stocks which are not intrinsically right they are any time going to fall. But the stocks if the girl is beautiful if the stock is beautiful it has the best of the balance sheets.
It has it it shows best of the profits. It shows best of the trends. It shows the future earning potentials. It shows the hidden values. Even if FIS don't buy, there are always shooters for a beautiful woman, domestics will buy, retailers will buy. But I don't I don't feel pessimistic about the market.
We move to another topic. Let's come back to the topic. So basically if we uh understand we understand that most of the people including me we follow the circadian cycles and similarly happens in the market. They are the naturally occurring phenomenas. It happens naturally and it is also results of human psychology.
You see why do you feel that in the world of capitalism uh do you know uh every year there is a chart basically a chart that is uh shown to people of which asset class did the best in the particular financial year. It includes Bitcoin. It includes gold. It includes silver. It includes uh equities. It include depentures.
It include all the types of assets real estate that that can be invested in. In last financial year the best one was gold. Before that some other asset class would be there. Before that some other asset class would be there. So basically the cycles also affect the asset classes or the allocation of money in the asset classes.
Did you see when uh the uh markets start falling the prices of gold keeps rising or the price of price of real estate rises, price of uh bonds, fixed deposit rises. Why do you think this happens? people feel panicked and they try to reallocate their investments. Why do you feel United States or the foreign institutions uh deinvest from Indian equities when the uh when the rates the loan rates or what we can say what uh we can say the uh repo rates gets decreases because once the rates the interest rates decreases the bank give can give the loan loans to the industries at a lower rate of interest.
The industries or the companies can take more loans at short amount of interest to be given. Companies can do major capex that they need. More capex leads to more production. And we don't have less amount of population for consumption. See any economy is going to run based on five different things. consumption, consumption, consumption, consumption and none other than consumption.
So these are the things. So basically if you talk about actual thing. So in order to properly position a portfolio a investor must understand the current situation of the market and where he's standing in the cycle. See if we talk about listening to the cycles. If we try to find meaning to the word listen, you can just go to dictionary.com and try to find the meaning to word listen.
It gives you two different meanings. The first it will give you is to listen to hear to take the information through your senses and the second one is to heed. If you want to understand this, we can understand this with let us suppose the markets is on its full face. It's at the top. It's at the best of the valuations.
It it has it has cut off all the ceilings. It has cut off the upper circuits. It's moving continuously up and you want to invest in the market. one of your friend who is a good financial advisor advises you not to because companies are at its peak. You're not going to invest in the companies which are at its peak.
Basically, if we try to understand about the equity markets, we are going to buy a equity which is at a lower price or maybe at discounted price which has a good value and which has a potential to move forward and gives a higher potential gain to us. Most of the people they invested in Tata Motors on what rate?
1,200 rupees. Why? Fear of missing out. That everyone is buying. Why? Why not me? Everyone is gaining money. Why not me? Tell me when is the the price of 1200 is coming going to come back? It is not going to at least not for 2 to 3 years. Why? because they lack the understanding of cycles. Understanding of automo cycles, automo sector cycles in India.
In India, the automo sector cycles has a seasonal cycle. In the last 3 4 years, people buy tons of automobile. The stock of Tata Motors was just 60 and it shoots up till 1200. Let it take some breath. Let it take some time to move forward. So that was it. Further if we try to move any situation that is going to come in the market each and every person in the market is going to get affected.
The situation that comes in the market is same for every participant. But what gives an alpha investor an edge is his ability to understand about the cycles about how the markets are moving and what will how will it help us? It helps us to understand about the odds of the market. Stock market I like stock markets because you can earn when the growth trajectory is moving upwards.
You can also earn when the growth trajectory is moving down. You can short the markets. So markets gave you possibilities of earning in the both sides. But for that we need to be the person who can understand who can heed who can obey the market cycles. That was most important. So basically we are it's a big discussion today.
So basically we are stopping it here today and we'll move to the next things in the later videos. With this thank you.
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