There really is no such thing as a ‘bull’ or ‘bear’ market – there are only stock market environments that are conducive to a given strategy, whether that is buying and holding ETFs or blue-chip stocks long-term, trading volatility with options, speculating in stocks for trends lasting multiple months or years, shorting stocks, and so on.
What’s good for one, might be of no consequence, or even dangerous to another. What offers great opportunities for one, might be akin to the doldrums for the other.
Seen from that perspective, I really find it interesting to watch how this market rally is being discussed from both sides – the believers, and the disbelievers. Everybody has an opinion, but most people can’t see the forest for the trees. It’s a bit like the story of the six blind men and the elephant, but in reverse.
Simply, the market is a strange vortex that allows people who have completely opposing viewpoints to make money – but commonly, it doesn’t allow them to do so at the same time.
There are the long-term holders and ETF indexers, who are hooked on the current market (although they tend to never sell their holdings, and thus have likely ridden the down-trend in 2022 into a large loss). There are the dip-buyers in the tech darling stocks such as Tesla or Nvidia, who are now patting themselves on the shoulder (although they probably bought the dip in many of the tech darlings from the 2020 bull run which likely lost them an equal amount of money). There are the disbelievers that can’t fathom how such a thin market can rally for so long, while trying to force trades in suboptimal ideas.
Then there are those, like me, that await truly great opportunities in a wave of novel strong stock leaders embedded within a conducive market trend. On the surface, I might seem like a disbeliever of the rally, but this couldn’t be further from the truth. This is not about valuations, or dogma. Rather, there are no opportunities in a market like this for my strategy, and clearly it’s someone else’s turn.
This is completely normal, but it becomes a problem once a market participant succumbs to the FOMO and starts abandoning his strategy, ever-chasing the greener grass, not realizing he can only lose in the long term by not sticking to his own strategy, blending approaches.
So be careful when the stock envy hits you – have a mechanism in place that shields you from impulsive risk-taking. Psychology is everything for profiting in the stock market, and I heavily recommend the teachings of Stoicism and Zen Buddhism to keep a clear head in times of turbulence, groupthink or FOMO.
