Mistakes in a Bull Market: That You Must Avoid

                      Mistakes You Must Avoid Hello my dear friends, I hope you all are doing well. Today I will discuss, what mistakes we m...

                      Mistakes You Must Avoid

Hello my dear friends, I hope you all are doing well. Today I will discuss, what mistakes we made during the bull market and how to avoid those mistakes.

So let's start Investing With Ease.

I want to start this blog with a quote,

The mistakes we made during the bull market, we understand that in the bear market.

⦿First, we have to understand that every market has its own cycle where we see ups and downs, in these situations if we quit investing then we are breaking discipline which will cost us later.

Every market has two types of cycle, 1) Long term market cycle, 2) Short term market cycle. These things I already discussed in my (Crypto Currency and how to survive in the bear market, blog) you might check that out after this blog.

➤➤Here we discuss some points,

1) Investing based on past performance:

One of the most common mistakes we made as new investors is investing in stocks, MF, Cryptocurrency, etc based on past performance. Just checking the past performance and hoping that the same returns we will get in the future is not an intelligent way to invest in any asset class. Because the past performance never shows the future projection of that asset class. The past performance only helps us to find a good stock, Mf, or any other asset class and it helps us to analyze whether it is good or not.

⦿That's why before investing, we must check past performance and analyze the scope of growing that asset class.

2) Following the trend:

In recent days we saw a tremendous rise in the market, which attracts many new investors which is good also a concern for the market. Why I am telling this a concern? 

If we saw the graph of any kind of asset class we can see great returns in past, and most of the new investors invest their money by seeing the past returns which I already discussed in point number 1. If they invest and didn't get the same return, they will face a panic mode that allows the market for a correction or crash.

⦿So we must invest in the market with proper guidance and analysis. It is good to follow the trend if you have that idea of when to enter and when to exit from it. You have to avoid buying at an expensive price.

Because the most important thing is, first don't lose money then make money.

★ In the bull market, we saw a tremendous trend of listing IPOs (I already discussed this topic in an earlier blog but still it is an important topic), and investors really invest here without proper fundamental analysis because of listing gains which are good for the short term but at a long run, it can be loss-making.

So following the trend and just invest in IPOs without knowing their business and growth is not a good option. So I suggest you, visit my blogs over IPOs and get a brief idea then you can make a decision whether to invest or not.

3) Searching of Gold:

➤ At the beginning of the bull market, we saw in Stocks or MF (or in other assets), everyone is finding a way to earn 1000% or more returns in just a few days. So they are investing in MidCap, SmallCaps, and even in Penny Stocks.

➤ This same is happening also with Cryptocurrency. Currently, people investing in such coins with smaller market-cap & in new coins just to get faster returns, returns like 100X 1000X in just days.

✸ In recent days a survey and news reports over, investing in small caps and in penny stocks told that millennial robinhoods wants to quick Das Ka Bees by investing in these stocks. If we check history whenever the penny stocks index hits all-time highs then the market crashes or market corrects heavily (The same happens with DogeCoin).

★ So we must stick to the quality because in the end if we are holding good companies then after long term whatever the market trends, we will get better returns than others. It means for the long term we must consider Fundamental Analysis & Technical  Analysis is for the short-term investors.

4) Not diversifying & taking too much risk:

When the market gives us good returns in a specific sector, this also applies to cryptocurrencies then we went to grab those opportunities and invest heavily in that sector or cryptocurrency which allows higher risk. Then with some instances, the market reacts and if we get lucky then we get really higher returns but if the market reacts opposite then we face high losses.

⦿ For these reasons taking too much risk on one single asset is not a good decision. The bull market is the best opportunity to diversify our portfolios. 

So how should we invest in these times? I have already discussed this in How To Invest In A BULL Market: Things You Need To Know. But still, here I will share this in a brief.

★ First: We must diversify our portfolio with good assets class in the bull market. We must avoid taking too much risk in the same asset.

     Second: Whenever we are investing we must avoid lumpsum investment, we must do it with SIP. This allows us to lower our risks and also we are able to buy assets in every price range which averages our cost.

     Third: This is the most important point, before investing you must do your own research, never invest with some tips from a call(many investment firms do that) or other sources.

➤➤That is it for today guys. We will see you in the next blog, and I will try to post as fast as I can. Till then bye-bye😃😃.

Editor:  Sk Elaf Ahmed, Rupak Chowdhury.