Across social media and investing circles, there is tremendous buzz around finding the “market top”. Despite all the rhetoric that one should not try to time the market, time in the market is more important than timing the market etc., people somehow find extraordinary time devoted to this discussion.
During my in-person interactions with a larger circle of professionals, friends and family, I am looking for the following signs:
(a) At a social gathering, every conversation would lead towards stock markets – How much returns have been made? What stock rallied how much in the shortest possible time etc? Which is the next hotter sector or stock?
At a family gathering last weekend, the conversation was more on real estate. Equities were distant second on the list. Infact, many have booked profits in this rally and looking for a dip to buy into the markets. This tells you that disbelief in the equity rally is far more than what is expected from many participants on the street.
(b) As an advisor led investor, you suddenly get a strong urge to sell the stock you have been holding for years and shift to the latest small or micro cap stock which is buzzing on social media circles.
That usually sends signs of Euphoria. Even though there are pockets of bubble-like stock movements in the market, there are not many signs of madness. Maybe it’s a sign of higher investment education?
(c) People start talking about those stocks which have given only positive returns and start boasting of multibagger returns. In the current phase, people are still stuck with older positions in new age business or expensive discretionary consumption stocks. A sharp correction is possible but a crash is unlikely.
(d) Investors start putting the investment advisors, portfolio managers and mutual fund managers on a pedestal. Their media coverages zoom in an exponential manner. Given that the sectoral and strategy rotation has been aggressive in this bull market, everyone has got a chance to be in the limelight. But we cannot say demi-gods have been made in the bull run like the previous ones.