If you have invested in small & mid caps in 2015 or early this year, you might be worried by looking at your portfolio in red with significant losses by now. Worst hit so far is the small cap index which has lost almost 15% in last 15 days and carnage may continue going forward as per most of the analysts.
Why not? We have seen many of the micro, small and mid cap companies giving returns in the range of 100% to 500% or more in last 1 to 2 years. If stock prices goes down by 20% or 30%, we must accept it as a normal correction. Yes, intensity of falling prices can hurt our sentiments, stock prices during such severe correction fall like a knife and make us fearful giving rise to emotional selling.
We continue to suggest our members to have patience and start accumulating small and mid cap companies with strong fundamentals in your portfolio during ongoing market correction. Following the crowd in the stock market can lead to disaster if you're not careful. Panic buying or selling can push stock prices beyond reason.
If you have at least two to three years before you will need to begin cashing in your holdings (at or near retirement), you may be able to ride out an extended economic downturn. However, if you do your homework, you'll find bargains in down markets that may reward you handsomely in the future.
We would like to highlight that Hidden Gems stocks released in first half of 2015 have given positive returns in the range of 20% to 70%, however Hidden Gems stocks released during 2nd half of 2015 have mostly given the negative returns in the range of -10% to -35%. Is this means Hidden Gems stocks released in 2nd half of 2015 are not the good companies? Not at all. You should understand that the returns while investing in companies majorly depends on their individual performance in terms of growth, future outlook and valuations and not on market sentiments in long term. Hence, if company continue to deliver strong earnings & valuations are reasonable, company is expected to outperform major indices giving better returns in medium to long term.
And that's the simple reason, why Hidden Gems holding period is 1 to 2 years. Investing in equities with medium to long term not only help investors to ride over market volatility but also gives them opportunity to add great businesses at discounted prices.
News are floating on leading business TV channels and newspapers that stock market may repeat history of 2008 going through severe downfall in major indices. However, we do not agree with such views simply because valuations are not at all expensive like that of 2008 (based on PE multiple) and markets are not at peak like that of Jan 2008. Moreover, we expect overall economy to do well in 2nd half of next financial year with better corporate earnings. We continue to suggest our members to avoid timing the markets and start accumulating good companies during ongoing market correction,
If you have patience and want to add extra power in your portfolio, start investing some portion of your savings in fundamentally strong small and mid cap companies - Hidden Gems & Value Picks.
The stocks we reveal through Hidden Gems & Value Picks are companies that either under-researched or not covered by other stock brokers and research firms. We keep on updating our members on our past recommendation suggesting them whether to hold / buy or sell stocks on the basis of company's performance and future outlook.
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Wish you happy & safe Investing.