In past cycles, operators took vulgar companies and made them look good.

Now, they take good companies and make them trade at vulgar valuations.

That is the difference.

Guy in 1989: "Wow, those Nifty Fifty investors were so stupid."
Same guy in 1999: "Yes, a 250 P/E makes sense for Cisco."

Guy in 2011: "Wow, those tech bubble investors were so stupid."
Same guy in 2021: "Yes, 25x sales and a 450 P/E makes sense for a car company."

@MichaelLeCuyer7 Bearish sentiment is high. At bottoms everyone always expects more downside first. I think I may have to raise my targets. This bull market has legs.

Good time to buy is when a theme or segment is ignored by the market and not when it is popular.

When you buy what is popular when it is popular, need to forego returns for few years.

When the upcycle in a sector is very strong
Poorly managed companies also make returns

2021 steel cycle-
SAIL went up from 30 to 120

Now in the current credit upcycle:-
PSU Banks are making money!

But does this mean credit culture has changed for PSU Banks?
No evidence of that

Bull runs in small caps are usually fast and furious, and the cycle repeats itself every 3-4 years. Every time, retail is sold stories of business turnaround and stock charts look fantastic for meteoric wealth creation. For the class of 2020-21, here's a couple of past stars.

These small cap stocks with 30-40 crore market cap went up 23X and 11x in a span of 24 months between April 16 and April 18. The story looked great then, but subsequently once liquidity and interest disappeared, the prices went right back to where they came from.

When in the thick of the action, it can be difficult to keep a level mindset. To keep the narrative believable, these companies are able to massage their top-line and bottom-line for a short period of time to show an imminent turnaround. Note the trends in these financials.

The company usually exhausts its ability to massage the financial statements very soon and the business health plummets dramatically. One collapsed so dramatically it has been selling fixed assets. The other one is Uniply Industries - a simple search on Twitter will suffice.

Newer small cap investors may be subscribed to many Twitter handles, Telegram channels, groups and even premium advisory services. Don't take anybody's word for the narrative being sold to you. On-the-ground-research and scuttlebutt can be plain fiction.