Finance
Financial Markets
Cryptocurrency
Investing
Stock Market
markets
Exit Strategy
Alpha Generation
Equity Markets
Greed and Fear Cycle
Bull Market
Bear Market
Investing Styles
In Financial markets, Exit strategy is least talked about topic but plays very important role in generating Alpha, here is a thread covering the 15 point strategy on the same with 2022 case study. Retweet for wider reach & get rewarded #StockMarket #cryptocurrency #Markets (1/n)
Equity markets goes through Greed & Fear cycle and pendulum tends to swing to the extreme with Overvaluation/ exuberance in Bull market peak and Undervaluation/ panic in Bear market #StockMarketindia #DowJones #SmallCaps (2/n)
It is very important to stay unbiased, calm and take rationale decision in all the situations. The rationale decision can be change in investing style/ strategy to conservative ( during bull market peak) or aggressive during bear marker bottom #StockMarket #cryptocurrency (3/n)
If we look back to 2022, we turned highly cautious and raised significant cash in market in Mid 2022 when BSE small cap index was 31,000. Reference (4/n)
Our decision was on account of various indicators such as
Valuation- Large cap valuation reaching cyclical high, our proprietary model which has accurately predicted various tops was indicating that small cap stocks are nearing peak #valuation #bsesmallcap (5/n)
Valuation- Large cap valuation reaching cyclical high, our proprietary model which has accurately predicted various tops was indicating that small cap stocks are nearing peak #valuation #bsesmallcap (5/n)
Behavioural Finance Indicated Irrational Exuberance: 90% of the 52 week high stocks were from below 200cr market cap, 15%-20% of small cap universe was in upper circuit, ownership pattern of retail was tilting towards bhangaarcap #pennystock (6/n)
Fundamental patterns signalling Red Signals: Inflation was persisting high, early sign of Fed tightening, signs of margins shrinking, 10 year US Bond yield was approaching 2% #inflation #bonds (7/n)
Price Action: NASDAQ & Crypto market was entering bear market, providing lead indication for things to follow #NASDAQ100 #cryptocurrency #BTC #Ethereum (8/n)
Risk Reward was Not Favourable- Amidst various indicators, one clear thinking was risk reward is not favourable in ST & upside is capped in the market, while downside can be high. Thus, we raised cash on first instance of fall (9/n)
Thereafter, risks started to materialise & Market positioning went from one extreme (Assuming fed wonβt pull the trigger) in Jan 2022 to another extreme ( assuming fed would be unstoppable ) within a span of 5 months . BSE Small cap index fell 30% in just of 5 months (10/n)
Market witnessed capitulation with stocks falling 15%-20% led by panic & we highlighted the same as our observations
Social media was full of pessimism all around with various articles/views being floating around for bad years ahead, recession etc (11/n)
Social media was full of pessimism all around with various articles/views being floating around for bad years ahead, recession etc (11/n)
That was the time to be greedy and we turned buyer and we highlighted the same (12/n)
Thereafter, market participants has been in denial mode and market has been surprising every one with its very fast recovery. Nifty has recovered 20% from low and small cap index has recovered 30% from bottom #nifty50 #StockMarketindia (13/n)
Thus, it is very important to chalk out a strategy / tilt aggressiveness depending upon market cycle so that you do not panic at bottom (14/n)
Now, one important point to think is path ahead, we will cover the same in a separate thread soon (15/n)
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