We continue to remain invested in high quality small and mid cap companies with strong fundamentals and increase allocation in these companies in case of fall in stock prices during market correction.We believe any significant correction in market from current levels must be considered as a buying opportunity. We expect cyclical stocks with strong fundamentals will continue to outperform going forward considering ease in interest rates, stable crude oil prices and higher spending.
If we look at 2015 and 2016, we find stock market extremely volatile as major indices - Sensex and Nifty made all time high in March last year, later corrected by almost 25% over period of next 12 months followed by sharp recovery of more than 25% during last 6 months from recent lows of Feb'16.
Sharp fall in stock prices in the month of Jan and Feb 2016 created panic situation for many new investors without any cues and put them on back foot when it comes to investing in equities. In the month of Feb'16, many investors were expecting further fall in stock market with indices testing new lows and hence remained on sidelines. However post union budget, we have witnessed strong rally across all broader indices as FII turned to be net buyers in the month of March and later in April and May this year considering positive developments like Union budget with focus on fiscal discipline, change in Fed views regarding US rate hike, stability in commodity prices and above normal monsoon and passage of GST bill which helped major indices, Sensex and Nifty to rise by more than 25% from their recent lows made in last week of Feb this year.
We believe correction of 4% to 5% in major indices from current levels can't be ruled out going forward. However as mentioned earlier, we do not believe in timing the market and always suggest our members to avoid it and invest in equities in a systematic way keeping a long term horizon.
Moreover, any sharp corrections give great entry point to long term investors as they get an opportunity to add high quality companies with strong fundamentals at discounted price.
High quality companies reporting 20-30% + annualized growth can deliver exceptional returns for the shareholders in long term. In case you have not yet started building a portfolio of high quality and high growth stocks for long term wealth creation, please find below the Wealth-Builder portfolio allocation for your reference.
Since inception, our Wealth-Builder portfolio has outperformed Nifty and Sensex by wide margin. Since 1st Jan 2013, Nifty has given returns of 45.6%, Sensex returns is 43.4% where as our Wealth-Builder portfolio has given returns of 250.4% to our members.
In terms of performance, 9 top performer stocks out of 15 of Wealth-Builder portfolio have given returns in the range of 70% to 730% since 1st Jan'13 that too when couple of stocks out of 15 were added in portfolio during last year and this year. Moreover, 10 stocks out of 15 have made 52 week high / all time high recently. We continue to hold these stocks as we believe these companies are registering good growth every quarter and doing all the right things to continue delivering robust top line and bottom line with strong operating margins.
There were few laggards also which have not performed up to our expectations and we exited these stocks and allocated the available funds to other good investment opportunities to ensure that Wealth-Builder portfolio continue to outperforms major indices by wide margin.
Note: Wealth-Builder portfolio update - Aug'16 will be released on Saturday, 27th Aug'16 and we will share the same with our Wealth-Builder members.
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