Its always wise to be greedy when others are fearful. Fall in stock prices of small and mid cap companies by 40% to 60% from their peaks use to happen during panic times, if a particular company delivers 3x to 5x or even 10x type of returns on your investments in period of 3 to 7 years, it can easily fall by 40% to 60% or even more from its 52 week high during tough times which arises due to profit / loss booking, series of negative events / news flows and severe sell off due to panic across markets. Below are some of the major reasons of severe fall in stocks prices of small & mid cap stocks since beginning of 2018:
i) Rejig in Portfolio by Mutual Funds to meet guidelines defined by SEBI
ii) Introduction of Additional Surveillance Measures by SEBI to curb volatility
iii) Auditors exit from various companies on fear of stringent action from authorities
iv) Unfavourable macros with increasing crude oil prices and depreciating rupee
v) Trade war fears between US and China, rising interest rates, continuous selling by FIIs
vi) Panic in market due to liquidity concerns, IL&FS default on debt repayments
vii) Political uncertainty with setback of BJP in assembly elections in 3 key states
viii) Concerns in market due to severe sell off in large caps stocks like Zee, Tata Motors
ix) Panic arising due to stock prices of ADAG companies falling line nine pins
Its important to understand that long term gains come in equities with such short term pain. We have seen such a severe correction in small and mid cap stocks after 2011. With fall in stock prices during this year, valuations of many small and mid caps become attractive to reasonable. In fact, many good companies are available at valuations which look very attractive considering the earning growth these companies are expected to deliver over next 2 years. This is not the time to sell in panic, but to accumulate good companies available at discounted valuations. Moreover, once the market bottoms out and form a base, we can see renewed buying interest in small & mid caps. Bad sentiments will not last for ever, its time for long term investors (2-5 years) to start accumulating good quality stocks which after a long time are becoming available at attractive valuations.
- Sir John Templeton
We released our "Special Report - 6 Hidden Gems Stocks to Buy / Accumulate" on 30th Sept 2018 and mailed it to our Hidden Gems members. Similarly, we also released our "Special Report - 6 Value Picks Stocks to Buy / Accumulate" on 02nd Oct 2018 and shared it with our Value Picks members.
While short listing 6 stocks under each service i.e. Hidden Gems and Value Picks, we evaluated each company on the basis of I-B-M-V-E-D parameters (Industry, Business, Management, Valuations, Earnings Growth & Debt Management) and rated every parameter using a rating scale – E,V,G,F,P (E=Excellent, V=Very Good, G=Good, F=Fair, P=Poor)
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 and Value Picks.
Moreover, if you have invested in stocks and believe that your investments are not performing well, subscribe to our Wealth-Builder service and get your portfolio reviewed by us. We will review fundamentals of the companies you are holding and guide you which stocks to hold and which to exit. We will also review your equity investments across sectors and companies to ensure that your portfolio allocation is right and outperforms major indices giving you better returns in medium to long term.
Start building your equity portfolio by making educated investment decisions, subscribe to our Hidden Gems, Value Picks, Wealth-Builder annual subscription services.
Below are the details of our services:
CARD / NET BANKING
|Hidden Gems||Rs. |
|Value Picks||Rs. |
|15% @ 90 Days||Rs. 4,000 (No Discount)|
|Combo 1: HG + VP + WB + 15%||Rs. |
|Combo 2: HG + VP + 15%||Rs. |
|Combo 3: HG + VP||Rs. |
|Combo 4: HG + 15%||Rs. |
|Combo 5: VP + 15%||Rs. |
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