It is rightly said, “no price is too high for a bull” and who wouldn’t want to ride this tide and reach great profits! But the catch in the bull market is to invest in the right spaces in order to get returns for a longer time. You have to keep in mind certain strategies of how to invest in bull market that takes you one step closer to generating profit.
But before that, let us understand what a bull market is? In a bull market, the prices of the majority of the securities rise over a certain period of time. With the prices rising, a lot of investors gain confidence which brings in more money to the market, eventually giving a certain rise in the stock prices.
With the enhancement of the bullish sentiments in the market, the price also sees a subtle rise. The bull rise is also responsible for changes in the country’s economy, and therefore, it becomes more important to invest in the right places.
Let us now have a look at the things that one should keep in mind when investing their money in the bullish trend.
How to Invest in Bull Market?
If you plant a sapling today keeping in mind the right season and the favorable conditions, you will get the fruits of it later. Similar is the case with stock market investments. The green zone might seem very fascinating but if not dealt with care can turn a little sore as well.
Let us list some important points that one should keep in mind when thinking to invest in a bull market:
1.Be in Sync With Your Goals
Before beginning any task, it is very important to define a target for yourself, be it in your life or the share market. Therefore, every investment should plan goal based investing.
Even when you are investing in the bull market, you should have a defined target, because an increase in the price can often lead an investor to stay invested in the stock even when the conditions are not favorable and hence increase the chances of loss.
So, you should know that you have to exit the market as soon as you reach the defined spot, in order to avoid losses. Since the bull market has a lot of investors’ sentiments involved, it becomes more important to know your goals.
Once you define your goals, it also becomes convenient for you to analyze your risk-taking ability.
A person who is almost 60 years of age and is looking for post-retirement plans will have a capacity to bear less risk whereas, someone in his late twenties or early thirties will have more risk appetite because of other sources of income.
Therefore, staying in sync with what you want and your risk appetite is very important to make profits.
2. Invest in Quality Stocks
As Ron Chernow says “As a bull market continues, almost anything you buy goes up. It makes you feel that investing in stocks is very easy and safe and that you’re a financial genius.” But what if after a certain time, the prices start moving in a different direction?
When the market is running on bullish sentiments, it is obvious that the majority of the securities will trade in the green. Here is when the confusion begins, of where to invest in the bull market.
genuinely wants to make good profits in the bull market must carry out proper research before planning an investment.
It is important to invest only in fundamentally strong companies because, at the beginning of the bullish market, almost all companies have the potential to generate great returns. But once some time has settled, only the strong companies can continue rewarding their investors.
You can choose the best stock market app like the ICICI Market trading app that provides you insights into the fundamentals of the company. The app is available for both Android and iOS users.
Along with a user-friendly interface, the ICICI Direct mobile app comes with a lot of unique features to give the users a superlative trading experience. This app is available for both Android and iOS users. Some of the features include,
Live charting, OI graphs, with various other analytical features.
Quick fund transfers.
Gives you information on Weekly & Monthly views on the market, for traders or investors looking for generating profit from short-term market movements.
For beginners, it offers the research back curated one-click equity baskets.
Research-based recommendation on equity and F&O stocks.
You can easily buy and sell in a single swipe after properly analyzing and picking the right stocks.
When you have to invest in a bull market you can prefer entering in value stocks that are fundamentally strong have high intrinsic value but are available at a low price value.
You should always remember that if you are investing for the long-term, you should only stick to quality stocks and gradually make sure that your whole portfolio thrives on that.
3. Make Diversity Your Success Mantra
Just like the beauty of the world lies in the diversity of its people, similarly, the portfolio looks very pleasing to the eyes when you implement diversity in the share market investments as well.
When you have to invest in bull market make sure you invest all your capital in a single company or a single sector, your whole profit/loss will depend on that. But if you diversify your portfolio, you can earn from one asset even if the other one is facing a downtrend.
You should not just invest in the equity segment, rather you can choose other asset classes like bonds, derivatives, etc.
In addition to this, make sure that you invest in different sectors and also different stocks. It will ensure that you don’t have to face losses even in times of adversity.
To understand this better, let us go back in time when the pandemic first started in 2020. The fear was new for the world and also for the stock market. While the market reacted to the news in different ways, there was one sector that bloomed in the pandemic as well: the pharmaceutical sector.
In contrast to this, the aviation and hospitality sector took a backseat because of the strict lockdown.
Now imagine someone who must have invested only in the aviation sector versus someone who diversified the portfolio? It is obvious that the people who invested some chunks of their capital in the pharma sector as well were able to make a profit during the pandemic as well.
Therefore, diversification is a savior even if the market sentiments are going against the grain. If you are a beginner, then first learn the tips on how to diversify your investment portfolio in India and make a better plan to maximize your returns in the market.
4. Let Go Of The Herd Mentality
A common mistake that a lot of investors do in the bullish market is following the herd mentality. When the market is bullish, a lot of investment tips start floating in the market. This causes confusion amongst the investors and often leads them to the wrong investment zones.
No doubt that it is important to study and analyze the trends, but it is also important to back it with research. Do not believe in random tips or advice from everyone.
Something that might have given good returns to your friend, might not do the same for you. Therefore, it is important that you don’t blindly follow all the tips.
5. Know Your Entry and Exit Points
Just like you should research and then only pick the stocks or sector to invest in, similarly you should also know when to enter and exit the bull market. If you know when is the right time to enter or exit a stock, you can easily book your profits on time and avoid losses to a major extent.
You can rely on technical analysis of a stock especially if you are looking to take a positional or swing position. You can use different charts and indicators to define the target price and stop-loss value.
Apart from all the points listed above, there are some additional tips that you should keep in mind when you are investing in the bull market.
Do not try to time the market. Often, it is difficult to guess the volatility and movement of the stock market. Do not hold on to your losses for a long time in lieu that the market will rise again. In addition to this, make sure that you exit when you achieve your target. Too much greed can often slip you into losses.
It is important that you find a strategy and then stick to it. Fluctuating the strategies off and on can harm your portfolio.
Use hedging strategies to minimize your risks.
A bull market is a great place for investors and generates fruitful results for them if done with ease and with the right mindset. You can follow some simple tips and use the best share market app to enhance your investing experience.
When you invest in bull market everything can run smoothly if you invest by keeping a goal in your mind, and plan it accordingly.
Planning to invest in the share market, get started now by opening an account. Get in touch with us and we will assist you in choosing a right stockbroker and in opening a demat account online for FREE!