Staying invested may be easier said than done when the markets are in bear grip, but it is a necessity for long-term wealth creation. Patience will pay rich dividends to those investors who learn to weather the storm. In fact, investments made in right set of companies during bad market conditions rewards long term investors in much bigger way.
To make our readers understand the benefits of investing in small caps and mid caps during bad times like we are experiencing now, we have released - Multibagger Small / Mid Caps and Long Term Investing Report recently on 10th July 2019.
This is a must read report for all those investors who started investing in equities over last 2 to 3 years and are worried now due to their bleeding portfolio, and do not have courage and conviction to invest further in small and mid caps.
The objective of this report is to understand why its utmost important to invest in equities (mainly small and mid caps) keeping a real long term view, becoming a discipline investor by investing in stocks during good as well as bad times to create wealth through equities. We are confident that this report will reinforce your believe to stay invested during these turbulent times in broader markets and build your conviction further encouraging you to invest in small and mid caps with good business fundamentals at cheap valuations.
Broadly, Multibagger Small / Mid Caps & Long Term Investing report covers:
1. 6 Major Reasons for Decline in Small & Mid Caps
2. Budget 2019 - Steps towards easing Liquidity Crisis
3. Benefits on Investing in Small & Mid Caps during Bear Phase
4. 2019 - A Year of Multibagger Opportunities
5. The Bulls, The Bears & The Farm
6. Long Term Charts of Small & Mid Caps
7. Release of Special Report - Potential 5-Bagger in 5 Years in July 2019
Fill the online form to receive our Multibagger Small / Mid Caps & Long Term Investing report directly in your inbox.
Under this report, while looking at long term charts of the companies with good businesses, you will realise that investors who entered in market by investing in small and mid caps during last 2 to 3 years have pain in their portfolio however those who invested in bad phase of market in 2011 - 2013 like that of today are still holding plenty of multibaggers in their portfolio. That is why its important to invest in equities keeping a real long term view. In fact, during turbulent times, we must increase investments / equity allocation in small / mid size companies which have good business fundamentals to get rewarded in big way in long run.
We are experiencing lot of hopelessness along with fear towards equities in 2019. The reason is the carnage in stock prices of many well-known established companies over last 18 months. Retail investors have taken the back foot and lost their faith and conviction towards investing in small and mid caps. We understand that it is really frustrating to see the Sensex and Nifty at all time highs while the BSE Small Cap and Mid Cap indices hovering at much lower levels compared to last year.
Since Jan 2018, Nifty and Sensex delivered positive returns of around 8%, where as BSE small cap index slumped 36%, and BSE mid cap index dropped 25%. Though these numbers tell us what the overall index lost, individual small and mid cap stocks were touching 52-week lows every other day and individual damage to most of the stocks in this category was to the tune of 50-70%, some even more than that.
When overall market sentiments are negative like we are witnessing now, quality businesses also face the heat. As bad stocks go down, good stocks go down with them too. But good companies make a stronger come back once economy cycle starts its upturn. Though it was a combination of issues that affected the broader markets, we can largely peg this mayhem to 6 major reasons:
Coming back to the current situation, the BSE small cap index is down by 31% from its peak made in January 2018. The liquidity crisis in NBFCs, the DHFL and IL&FS defaults, series of rating downgrades by rating agencies, lenders dumping stocks of debt laden companies have taken the steam out of small caps. Fear and misinformation has shattered investor’s confidence and hence quality businesses are back to cheap valuations.
To ease NFBC liquidity crisis and get economy growth back on track, Government is in process of taking all possible corrective measures. In Budget 2019, Finance Minister Nirmala Sitharaman announced that the government will provide a one-time six months partial credit guarantee to public sector banks to buy high-rated pooled assets worth Rs 1 lakh crore from NBFCs. This will provide the much-needed liquidity to NBFCs, they can thus liquidate their portfolio and meet their liabilities in a timely manner.
Moreover, below are the few announcements made in the budget which certainly qualify as steps in the right direction.
- Recapitalisation of banks to the tune of INR 70,000 crores
- The Credit Guarantee Enhancement Corporation to be set up in FY20
- The action plan put in place to deepen the market for long-term bonds
- 2% interest subvention for all GST registered MSMEs
The correction has given investors an opportunity to sieve through and find good quality stocks which are backed by strong balance-sheet and robust cash flow. The broad underperformance of the small and mid-caps seems to be overdone and interesting bottom-up opportunities are now available in this space across sectors. Earnings revival could also set the ball rolling in terms of re-rating these categories of stocks.
Also Read: Techno-Funda (Potential Multibagger) Stock 2019 Report
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