You may remember those days,not so long ago, when putting as much money as you can into small cap stocks was a fad among investors.It worked like crazy for a while... with many people dumping every penny they had into small caps and making huge returns quickly as a result of it.
But soon the markets started falling and the small cap game became a lot,lot harder.
Under-prepared and under-informed investors could no longer take small caps casually like they used to. And many of them found this out the hard way when they lost money awfully fast in small cap stocks.
Soon cries echoed from all across the investment community about how "Small Caps are Dead", "Small Caps are Worthless" and "Small Caps are Finished"...And they probably had a point. The game had gotten a lot harder.
But while most people were busy complaining and griping about this,some investors had knowingly or unknowingly discovered the secret to making 1,000% or more returns from small caps... and they were silently working their way towards it.
These investors were totally unfazed by the market changes because they knew they’d earn their profits regardless of whether the market went up, down or remained flat.
Aut first, there are a few FACTS that you need to know.
As you may know already, small caps have performed poorly in the last few months. And it has unfortunately led many investors to the conclusion that the 15 minutes of fame for small companies are over.
This is far from the truth!
The continued fall in the prices of small caps was triggered by a panic sell-off that started in the broader market due to the impact of financial crisis in the US.So, ALL small cap stocks across ALL sectors had crashed without discrimination.
Second... while small caps fall fast in general, they also rise equally fast.
Here are some randomly selected Small Caps stocks that prove this point (one stock we recommended is also in there)...
Small caps' fall is fast... and so is the rise
FALL RISE
Hindusthan National Glass -57.2 105.0
Jindal Poly Films Ltd. -50.2 91.9
Karuturi Global Ltd. -73.7 83.6
Madras Aluminium Co. Ltd. -67.4 64.4
Indo Tech Transformers Ltd. -38.5 61.4
Clearly, small companies are fast growers and it shows in their stock prices. And the best part is... small caps have the potential to be 10-baggers also!
However, there is one drawback when it comes to small caps..
While The Potential to Make Returns Is Huge,so Is The Risk Involved...
The problem is that many people don't understand this. Or they understand it but don't take it seriously.Smaller companies typically have fewer competitive advantages and financial resources to weather a market downturn. So, naturally, when there is a sell-off in the markets, small caps bear the brunt of it as they are more "risky" to hold.
And because of the size of small caps, it doesn’t take much money to drive their stock prices down faster.
Since the markets have crashed, should you start shifting all your money from small caps to government bonds, provident funds, post office deposits, fixed deposits, and large-cap stocks? You might have been told by others that it's the best thing to do right now.
But my answer to that would be - No, definitely not!
You see, while most stock brokers and investment firms push small caps as a way to make big returns in a short time, we believe they're as an extremely good "long term" investment.
Small caps have been proven to post better returns over the long run than large caps - returns often in excess of 1,000% over a 10-year period.
You don't have to take my word for it. Here are some real examples...
Let's say you had invested just Rs 15,000 in Hindustan Construction back in 1998. You'd have easily made almost Rs 286,422 by now. If you had invested Rs 15,000 in Pantaloon then, you'd have made around a whopping Rs 4,934,694 now!
So, adding a few small-cap stocks in your investment portfolio is one of the surest ways to multiply your wealth or is it??
The choice is purely yours.
Source: http://yachendra.blogspot.com/
But soon the markets started falling and the small cap game became a lot,lot harder.
Under-prepared and under-informed investors could no longer take small caps casually like they used to. And many of them found this out the hard way when they lost money awfully fast in small cap stocks.
Soon cries echoed from all across the investment community about how "Small Caps are Dead", "Small Caps are Worthless" and "Small Caps are Finished"...And they probably had a point. The game had gotten a lot harder.
But while most people were busy complaining and griping about this,some investors had knowingly or unknowingly discovered the secret to making 1,000% or more returns from small caps... and they were silently working their way towards it.
These investors were totally unfazed by the market changes because they knew they’d earn their profits regardless of whether the market went up, down or remained flat.
Aut first, there are a few FACTS that you need to know.
As you may know already, small caps have performed poorly in the last few months. And it has unfortunately led many investors to the conclusion that the 15 minutes of fame for small companies are over.
This is far from the truth!
The continued fall in the prices of small caps was triggered by a panic sell-off that started in the broader market due to the impact of financial crisis in the US.So, ALL small cap stocks across ALL sectors had crashed without discrimination.
Second... while small caps fall fast in general, they also rise equally fast.
Here are some randomly selected Small Caps stocks that prove this point (one stock we recommended is also in there)...
Small caps' fall is fast... and so is the rise
FALL RISE
Hindusthan National Glass -57.2 105.0
Jindal Poly Films Ltd. -50.2 91.9
Karuturi Global Ltd. -73.7 83.6
Madras Aluminium Co. Ltd. -67.4 64.4
Indo Tech Transformers Ltd. -38.5 61.4
Clearly, small companies are fast growers and it shows in their stock prices. And the best part is... small caps have the potential to be 10-baggers also!
However, there is one drawback when it comes to small caps..
While The Potential to Make Returns Is Huge,so Is The Risk Involved...
The problem is that many people don't understand this. Or they understand it but don't take it seriously.Smaller companies typically have fewer competitive advantages and financial resources to weather a market downturn. So, naturally, when there is a sell-off in the markets, small caps bear the brunt of it as they are more "risky" to hold.
And because of the size of small caps, it doesn’t take much money to drive their stock prices down faster.
Since the markets have crashed, should you start shifting all your money from small caps to government bonds, provident funds, post office deposits, fixed deposits, and large-cap stocks? You might have been told by others that it's the best thing to do right now.
But my answer to that would be - No, definitely not!
You see, while most stock brokers and investment firms push small caps as a way to make big returns in a short time, we believe they're as an extremely good "long term" investment.
Small caps have been proven to post better returns over the long run than large caps - returns often in excess of 1,000% over a 10-year period.
You don't have to take my word for it. Here are some real examples...
Let's say you had invested just Rs 15,000 in Hindustan Construction back in 1998. You'd have easily made almost Rs 286,422 by now. If you had invested Rs 15,000 in Pantaloon then, you'd have made around a whopping Rs 4,934,694 now!
So, adding a few small-cap stocks in your investment portfolio is one of the surest ways to multiply your wealth or is it??
The choice is purely yours.
Source: http://yachendra.blogspot.com/
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