“Thappad se Dar Nahi Lagta, Consolidation se Lagta Hai.”
Long time back there was a Meme about this Dialog
I would put it in Market Terms:
“Thappad se Dar Nahi Lagta, Consolidation se Lagta Hai.”
- Thappad = Bear Market/Fall.
- We as humans adjust quickly to the 20-30% fall in Portfolio in the Bear Market, as most are preceded by a Bull Phase where enough money is made.
My Dialog for the Bull Market:
“Teji Me Itna Loot Lo ke Mandi se Farak Na Pade”
Mentally it's more difficult to live through the Consolidation Phase.
The First Big Fall for the over-leveraged turns to:
“Acha sila diya toone mere pyaar kaa
Yaar ne hee lut liya ghar yaar kaa”
If one has survived the fall without leverage or doing fatal mistakes, the mind will eventually adjust to the new portfolio value / corrected market with time.
It's much easier for Investors/Traders who have seen more than 1 cycle.
You become Humble after the Market humiliates and tortures you badly in 1-2-3 bad cycles.
Mind you, nobody starts Humble in the Market —
without craziness of youth or self-belief or brashness or whatever —
How would you think of beating the Market returns 😊 by a margin and consistently?
The cycles bring humility 😊
Veteran Investors can joke about it.
For example – Vijay Kedia’s dialog:
“Bhagwan Deta hai to chappar Faad ke deta hai.
Jab Leta hai to Thappad Maar Ke Leta hai.”
Bhagwan jab deta hai to chhappar phaad ke deta hai aur jab leta hai to thappad maar ke leta hai. 😎 pic.twitter.com/aOPWV96DxN
— Vijay Kedia (@VijayKedia1) February 27, 2025
The Consolidation Phase after the Fall can last:
- 8–12 months, or even
- 18–30 months
It is a major mental pain, although the financial pain is generally lower in this phase compared to the steep fall.
- Stock prices and portfolio continue to go sideways or slowly up or drift lower in the Consolidation Phase.
- Not every cycle one may have a large allocation to new leaders.
- Most new participants are stuck with old winners.
- Also, the previous high of portfolio or index may take longer!
Even if you have a good bounce from the lows, one is still anchored to the peak!
Now every investor/trader starts questioning the previous thoughts:
- I am passionate about Markets
- Market is my first Love
- Birthday Cakes with Nifty etc
- I love to read Balance Sheets instead of watching Movies
- I can easily make a living and Retire Investing
- Etc etc...
It becomes tougher to keep:
- Doing the Research
- Upskilling
- Reading
- The same thing with Patience when there are no Quick Rewards
Love turns to Hope, Hope turns to Hatred.
My Observation:
The Consolidation Phase kicks out more people & not the Bear Market.
If one continues with Patience and survives this Mental Pain,
The Next Cycle can be Super Gain.
Now let's look at the Chart and understand how it was in previous Cycles:
BSE Smallcap Index Chart
.
.
2011–2013
- Just when one recovered from the 2008 fall with full recovery in Index by 2010 — the fall starts.
- After the bottoming out of Global Markets and topping of Gold — a good rally in 2012.
- India goes into a tailspin with Smallcap Indices breaking 2011 lows.
- USD-INR went from 52–55 to 68, Smallcap Indices down 50%+
- Valuations were cheap in 2013, became more cheap by 2013 end 😊
- One of the most painful times after 2008.
- 2008–2013, 2000–2003, 1992–1997 — were falls which kicked a whole generation from investing again for decades.
2015–2016
- Elections, Global Market, surprise RBI rate cut — markets go sideways.
- Nifty 9100 to 8000 but Smallcaps relatively better.
- Quite a few leaders as 2013 was a solid low base.
- Smallcaps did okay.
- A drop in 2016 takes stocks back to where they were a year back.
2018–2019
- LTCG, IL&FS, SEBI and what not.
- Markets teach a new lesson: Nifty hits new all-time highs & Smallcap Indices at 52-week lows.
- “Trivedi hi bachega” Meme
- A comeback started in 2019 and was about to breakout!
- Covid strikes ☹
2021–2023
- After the initial fall, we get the Russia-Ukraine war and its after-effects lasted longer than expected.
- Sideways on the Smallcap Index after the 2022 bottom. 8–12 months.
- New leaders in PSU, Manufacturing, etc.
- A good drop in March 2023.
2024 to Now
- Initial Sharp Correction done with Trade Tariffs creating the last knock.
- Now will there be tougher after-effects? Will be known in coming 3–6 months.
- Sharper recovery in Index compared to Smallcap/Midcaps.
- A Consolidation phase to start or another Downleg and then Consolidation?
One thing is clear:
The Initial Fall has happened with Broader Markets taking a good knock.
Now comes the Mentally tough Part of living through Consolidation while continuing to stick to:
- Keep doing Research
- Look for New Leadership on Relative Strength, Results, Value
- Be Patient
- Keep Low Expectations
- Believe in Yourself
- Read More, Learn More, Add Skills or Focus on your Core Business (if not a Full-Time Investor/Trader)
- Be Optimistic for the Long Term
The last line is generally the most important.
Because: Most Bull Markets start out of Thin Air.
- Who would have thought:
- In Oct 2008 — that a similar fall won't be seen for next 17 years
- In Aug 2013 — that Smallcap Index will go 4x in 5 years
- In Nov 2016 — Global Market with Trump in US and Demonetization in India
- In March 2020 — a New all-time high by Nov 2020
- In March 2023 — a New Bull Market in everything!
Conclusion:
- It’s just been 7 months in the current Correction.
- A bottoming out is generally seen in 8–12 months.
- The Consolidation Phase is starting.
- Focus on finding New Leaders and be ready to make switches if still in Old Winners.
- Prepare for the Next Bull Cycle but be Patient & Disciplined with Lower Expectations.
