4 Classes of Stocks
In India there are 4 Classes of Stocks – The Bull Run starts with the first & ends in the last.
Characteristics of Bull Run
Bull Run causes exhuberent reflections in prices in short-term . This will attract lot of Amateur Short-Term investors into the Stock Market just enough to Burn their Capital in few months.
Bull Run also attracts lots of IPOs to suck out the Free Cash of Investors. Later once the low-quality high-priced businesses are launched through IPO, there will be tremendous outgoing of money from good quality companies. This would be laying the foundation for a Short-Term bear market.
We are not saying a Bear Market immediately, but in few months down the line there will be Corrections on these Over-valuations. These are Opportunities.
30% Free Cash is your Rich Ticket Formula
As we we have advised in Portfolio Management & Master Mind Training you need to keep 30-50% Cash ready for absorbing any bear market down times. These bottom buys will give more Portfolio Growths!
Portfolio Returns Matters!
Remember, if you have 1 stock with 1000% Returns and 9 stocks with 10% Returns your Portfolio Returns is just 200%. So the Total Portfolio Returns actually matters.
Net Worth Growth 20% Matters
To be in the Grow Rich Circle you need to have Net Worth Progress of 20% or More. It is only possible if you put 50% of your Capital into Stock Market. But, no one can do that unless they have Solid Learning & Understanding.
Example: During March 2020 we were recommending Manappuram Finance which was a 100% Multibagger in 3 months. But few subscribers only put Rs. 5000 on the same. So getting Rs. 5000 Profit did not made them Rich as they were putting only less than 5% of their Net Worth in Stock Market.
FIXED DEPOSITS BENCHMARK
You have to compare stock market returns with the Safe FD Returns. FD Returns are steady 6-8% every year. But stock market portfolio returns could be -50% to 50% in any year.
Change the Bench-marking Years from 1 Year to 5 Year then you will be Always in Profit with Stock Market.[That is the Power of Value Investing, Intrinsic Value & Long Term Holding)
Change Perspective from 1 year to 5 year then you are Thinking like Celebrity Stock Investors!
BULL MARKET MAKE SELDOM RICH!
It is a well-known truth that Bull Market Investments will Not make you Rich as the Prices are Over-valued.
To make Super Good Progress in Wealth you need to Learn to Deploy Capital during Bear Market – from the bottom of Bear Market to Peak of Bull Run will give higher portfolio profits like 500-1000% in a 5 year period.
- Do not get over-excited by the bull market returns
- Look your portfolio less often as this is Passive Investing
- Create more Capital from your Career & Business and this should be your Active Investing
- Ensure 30% Cash Fund ready for Bear Market Investments
- Quarterly Audit your Portfolio & Deploy Capital to lossy items ensuring Growth
Note: This is just a knowledge article – please do not bombard us with your queries – new multibagger will arrive next month 🙂