Everyone seems to be making money during a bull market run.
Rising share prices, however, can give investors a dangerous boost of confidence, leading them to believe good times never end.
The biggest risks may not necessarily come from the market but from the mistakes investors make when prices continue to rise.
Mistake #1: Chasing Stocks After They Have Already Rallied
A common folly is this: “It keeps going up, so I should buy before it is too late!”
Often, when stocks gain attention for their rise, they have already rallied.
If you are to buy a rising stock, make sure it is backed by strong earnings and durable competitive advantages, not optimism and hype.
DBS Group Holdings Limited (SGX: D05) has been on a roll since April 2025, rising from S$38 per share to S$76.65 as of 4 September 2026.
The bank posted a record high of S$3.08 billion in net profits for 2Q2026, up 9% year-on-year (YoY), with its wealth management fees rising 42% YoY to S$919 million.
As Singapore’s largest listed company, DBS has seen its rally backed by strong earnings growth, healthy balance sheets, and future potential.
Mistake #2: Becoming Too Confident After a Winning Streak
Investors tend to take on unnecessary risks when previous trades worked in a bull market.
They load up their portfolio with similar stocks, hoping to replicate the success.
However, investment returns are not always repeatable.
Market conditions eventually change.
A concentrated portfolio can suffer disproportionately during a correction.
A portfolio consisting only of bank stocks like DBS, OCBC Limited (SGX: O39), and UOB Limited (SGX: U11) can suffer when there are sudden, rapid rate cuts.
Hence, investors should regularly review their portfolio allocations, especially in a bull market where positions can quickly become overly large.
Mistake #3: Ignoring Valuation
Great companies can become poor investments at the wrong price.
Valuation is essential in determining expected returns.
A company’s price-to-book (P/B) ratio shows value relative to net assets, and its price-to-earnings (P/E) ratio measures growth potential.
The ratios are useful for comparing companies within the same industry, not companies in different industries.
When measuring valuation for real estate investment trusts (REITs), we look at metrics like yield, distribution per unit (DPU) growth, price-to-NAV, and leverage.
Asia’s largest listed REIT, CapitaLand Integrated Commercial Trust (SGX: C38U), announced a 7.1% YoY increase in DPU to S$0.0602 for 1H2026.
With an aggregate leverage of 37.4%, CICT’s debt maturity profile remained well staggered, with an average term-to-maturity of 4.1 years, helping to mitigate refinancing risk in any single year.
Mistake #4: Selling Good Investments Too Early
Bull markets can tempt investors to lock in gains prematurely.
However, even if the profit looks large now, selling strong businesses early can reduce long-term returns.
Instead, ask yourself before selling:
- Are earnings still growing?
- Is the competitive advantage intact?
- Is management still allocating capital well?
- Is valuation still reasonable?
If the answers are yes, holding onto the winning stock might be a better choice.
Mistake #5: Forgetting That Bull Markets Eventually End
During a market rally, it is easy to build a portfolio that only works when prices rise.
It is common to underestimate the importance of diversification, balance sheet strength, sustainable dividends, and free cash flow when everything is rosy.
Build a strong portfolio with diversified businesses: defensive consumer staples such as Sheng Siong Group (SGX: OV8), which has zero debt; strong, reliable banks such as DBS; and global technology and defence groups such as Singapore Technologies Engineering Ltd (SGX: S63).
The goal is not to predict exactly when a bull market ends, but to own investments that can withstand different market conditions.
What Bull Markets Teach Investors
Discipline matters more than hype.
Long-term success depends on fundamentals, not emotions.
Investors should be asking themselves these questions:
- Am I buying because the business is good or because the stock price is going up?
- Am I taking on unnecessary risks?
- If the stock price falls by 30%, would I still hold the business?
How to Invest When the Market Keeps Rising
Stick to your investment process and keep evaluating businesses using the same criteria.
A strong market does not mean you need to stop investing.
However, it does call for you to be more selective with what you buy.
Focus on opportunities where valuations remain reasonable.
Maintaining diversification across sectors and companies is also essential.
Investors should rebalance their portfolios by reducing positions that have become overweight, but without liquidating their holdings due to a rise in prices.
Above all, keeping a long-term outlook is very important.
Market corrections are inevitable.
A well-constructed portfolio can weather different market conditions and still aid you in long-term wealth creation.
How Different Investors Can Respond
New investors do not have to feel pressured to “catch up” in a bull market.
Start with a sensible, diversified portfolio.
You can look at blue-chip stocks and REITs as a starter.
Do not chase winners just because they are winners.
Experienced investors should check if their portfolio risk has increased during the market rally and re-evaluate valuations.
Check if the initial thesis for each holding is still valid.
For income investors, it is important to pay attention to the sustainability of dividends and not simply go for high yields.
Business quality remains important.
Dividends should be paid out of sustainable earnings and free cash flow, not debt.
Get Smart: Don’t Let a Bull Market Change Your Process
Bull markets are exciting.
They can create wealth but also make investors abandon the habits that built their wealth in the first place.
Chasing fads, being overconfident, disregarding valuations, and taking unnecessary risks will make you vulnerable to changing market conditions.
The smartest investors ensure that their portfolio continues working for them under new conditions.
Strong markets are the time to review your investment strategies, not abandon them.
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Disclosure: Wenting A. does not own any of the stocks mentioned.
