It was an year ago I asked to Exit Stocks to my Paid Circle. At the time NIFTY PE was Peak at 29, along with Smallcaps & Midcaps were mindlessly over-valued. If I remember correctly, Cera was valued at PE 60 with a Flat EPS Growth.
When I said to Exit the stocks, especially over-valued ones – few people contradicted it. They were saying market will grow further from here & continued buying more. Their confidence were built by just few years of investing. However, I have cleared my stocks during the time ensuring I made profits & no losses further.
Today when I see the same Contra Investors, I cannot see that Buying Confidence in them. They are already burnt their portfolio with 50% Loss and No Confidence in stock market!
What Happened here?
As I said before, there is Buyers Market and Sellers Market in any Investing Arena. I used to handle multiple areas like stock market, real estate, gold market etc. – so I can assure that this Buyers Market & Sellers Market exists in all these areas.
What is Buyers Market?
Buyers Market is a state where Prices are Under-valued, Pessimism runs in the Veins of Investors, Investors shy away from this market!
This is called Buyers Market because we Buy things Cheap here! An Intelligent Investor would see this market as an Opportunity to Buy & Hold for Long term.
What is Sellers Market?
Sellers Market is contrary to Buyers Market where Prices are Over-valued, Optimism makes Investor blind on valuations, they run & accumulate all stocks on limelight. This is extreme madness state.
This is called Sellers Market because we can Sell things at Higher Price here! An Intelligent Investor would see this market as an Opportunity to Sell & Switch to other Investment vehicles.
Only 5% People really make money in Stock Market!
Nevertheless to say, Only 5% People make money in Stock Market as 95% act against the crowd by selling in the buyers market & buying in the sellers market.
In fact, these 95% amateurs are helping the 5% intelligent investors. The amateurs buy at high price allowing the intelligent investors to gain more profits. The amateurs sell at low prices allowing the intelligent investors to buy at cheaper prices.
So they just double the returns. For example one who bought at Rs. 100 and Sold at Rs. 1000 will gain 1000% profits. At the same time if it is bought at Rs. 50 during bear market and sold at same Rs. 1000 the gain will be 2000%!!
So what is the Current Market Situation?
As of now, we have provided our HNI Customers with the Market Situation reports.
India Large Cap Segment is SELLERS MARKET
India Mid Cap Segment is NEUTRAL.
India Small Cap Segment is BUYERS MARKET
So what should one Infer from it?
One should start selling over-valued stocks in Large Cap segments.
One can start buying under-valued stocks in Small Cap segments.
Think Long Term
During 2018 I sold my stocks & moved to other Investment Vehicles. Again in 2019, I restarted buying stocks with a holding vision of 5-10 years or more. I repeat, stock market is a place where we have to give ample time for the company to perform, grow, profit & reward the investor. It is a compounding process taking time! So think Long Term & Start Investing now!!
You cannot Sail without a Bear Market
It is all about wrong education than if an Investor thinks they can completely Ignore a Bear Market – Absolutely Not! In my case, even though I escaped from the biggest disaster, I still encountered losses after my restart in investment.
One time my portfolio went 30% on loss, but I continued buying more as “potato was cheaper”. Now the Portfolio is in 10% profit level as the stocks recovered.
Even Warren Buffet does the same. During 2008 crashes he Invested in Bank of America stock – but the stock went down from his price too – he continued buying and after few years – he is in deep profits! So the lower the price – higher the profits!
My theory is simple, if one is expecting 500-1000% returns in stock market, he should be willing to see 30% losses in portfolio!
However, for a troubled investor these words will not add value – they will continue to be Idle in the buyers market & once the recovery happens – they will again buy on top & just having mediocre returns.
Few Stock Updates
Two of our 5-Multibagger-Picks got Listed in High Growth Asian Companies of India Companies 2019. They have High EPS Growth along with Moderate or No-Debt.
One other company issued Bonus Shares.
Other one is having whopping 70% EPS growth too.
For those who have missed Investing in these 5-Multibaggers, can buy the eBook at a Discounted Price here.
Intrinsic Value Calculator
We have started a Forum to Help Investors with Value Oriented responses. You can register & start querying here.