Are you being greedy now when others are fearful?
If the answer is yes, what are the kind of stocks are you buying?
Are you averaging the existing stocks in your portfolio or are you buying new ones?
Well, if you are sitting on a few multibaggers and are looking to buy the same stocks again, this editorial is for you.
If you bought a stock say in 2020-21 and which became a 10-12 bagger but has now fallen 30-35%, there could be better options than buying more of the same stock. You could perhaps be better off buying a brand-new stock than buying more of the same one.
At least this is what my recent small study revealed.
Take a look at this portfolio of 30 stocks.
Well, these are the unsung heroes of the previous small cap bull market i.e. the bull market between August 2013 and January 2018. These are small caps i.e. outside the top 250 in terms of market capitalisation.
This was the period when the BSE Small Cap index went up more than 4x, a gain of 300%.
Any idea how this group of 30 stocks performed? Well, an equal weighted portfolio of these 30 stocks went up by a whopping 22.6x.
Yes, that’s right. A portfolio with an equal amount invested in each of these 30 stocks would have seen Re 1 turn into Rs 23 in a short span of 4.5 years.
So, this would have been a 23-bagger portfolio compared to the 4-bagger returns of the BSE Small Cap index, a huge outperformance.
Well, this bull market ended in January 2018 and the markets did not start recovering until March 2020 when the BSE Small Cap index had crashed almost 56% from the top.
Yes, from its highs in January 2018, the BSE Small Cap index fell a whopping 56% before it started recovering from March 2020 onwards.
And what a recovery it has been. Between March 2020 and December 2024, the BSE Small Cap index has gone up an impressive 6.5x.
In the bull market between August 13 and January 2018, the BSE Small Cap index went up 4 times but this time,
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