Friday 1 March 2019

The Road Ahead

Dear Readers,

2013 to 2018 was one way bull run in midcap small cap, with every tom dick harry becoming a stock picker and every tom dick harry stock becoming a multibagger. When such excesses are there we have a bear market impending (I had warned in Nov 2017 with my post Be Value Sensitive) post Jan 2018 this time the bear market came but on midcap and small stocks mainly and not on the indices, now most of the dust is settled and bull run in mid & small cap will begin meanwhile individual cases where there are excesses will continue to get punished.

All these are normal market phases we need to adapt to.

We have recently witnessed Media Outlets are picking up any stock and announcing that they have spotted corporate governance issues and as a result stocks crashes 10-20% just like that.

Remember, how in 2017 there were "Rocket Emojis" flying all over the whatsapp groups related to stock markets, every stock picker was having a great time, every stock was a potential multibagger. 

Just like that now every other stock has issues, is a fraud company, or over-valued according to popular belief.

Some popular beliefs that got trashed recently was Market will crash due to BJP losing state elections, Market will crash due to Auto nos being weak, Market will crash due to Urjit Patel sudden resignation.

Another popular belief that has made space in everyone's mind now is that Midcap and Small Cap will continue to fall, Everyone believes till election nothing will happen in the midcaps and smallcaps.

Markets generally are under no obligation to reward popular belief.

I feel we are now in a situation when valuations are comfortable but panic is high, fear mongering about corporate governance is at peak. But, there might not be any panic selling left because there is no one left who would sell.

Some people also believe the current India Pakistan tension is going to play a big spoil sport for the markets. I beg to differ on this, India is a growing economy with comfortable macros for now after the Crude price crash, Pakistan will not be able to afford any war with India and escalations would just be hyped by Media.

So the point i am trying to make is, Like the BULL RUN had its excesses and it got reversed I feel the BEAR RUN in midcaps and small-caps is over now and it is time for a sharp rebound in quality mid & small cap names and it should start before the general elections itself.

2013 to 2017 was a period of many multibaggers, Right stocks went up 5x and 10x easily.
2019 to 2021 will be a period of many right stocks doubling and/or tripling, One should not get huge 10x multibaggers easily right now as the cycles and markets have started to mature up.

Which are these stocks? Right from 2014 I have been writing about stocks I like for free and would continue to do so going forward.

We also provide research to our clients at ACE Equities.

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Thanks & Regards,
The Ace Investor

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