Journey from 21000 to 21000 : Leasons Learnt

After a gap of 5 years and 9 months, Stock Markets have regained the top. The Sensex has breached its previous all-time high of 21,206.77 made on January 08, 2008.

With index – Sensex / Nifty being the indicators of stock market, it is easy for anyone to assume that Investments made in stock market have just reached where it was, and it has not grown in this period. But the fact is the components of index which rallied in 2008 and in 2013 have been vastly different.

This time around consumers goods, pharma, FMCG & technology stocks have been key sectors which gained. As a result investors who had stocks in these sectors would have gained inspite of Index being at the same levels. Stocks in reset of sectors are either down or flat.

SENSEX STOCKS:

• There are 10 Sensex stocks which have gained by over 100 per cent in that period. 
• Out of them, three stocks have gained between 200-300 per cent, one stock has surged between 300-400 per cent and another one has surged over 400 per cent.
• There are eight Sensex stocks which are down by over 25 per cent.

SENSEX A GROUP:

• In Sensex A group, there are 50 stocks which gained by over 100 per cent. Among them, 21 stocks have gained between 200 and 300 per cent, eight stocks surged between 300 and 400 per cent while six stocks have rallied over 400 per cent.
• There are 44 stocks which lost by over 50 per cent in that period.

Hence, if investors had atleast a few of these stocks in their portfolio, they would have made hefty returns. And many of these stocks represent simple businesses.

The take away points out of these stocks performance are:

• It is Assumed that 'index return' is equal to 'stock return'. It is not true. Stock / Sector specific reasons if favourable could trigger a rally – and result in handsome gains to investors.
• If investors had atleast a few of these stocks in their portfolio, they would have made hefty returns. And many of these stocks represent simple businesses.
• Never concentrate your investment in one or two sectors or one single stock. It is always better to hold a diversified portfolio of stocks.
• Many investors could have been holding these stocks, but might not be aware of these returns. Along with the crowd they might feel pessimistic about market. Only when they do a periodic portfolio checkup (like Master Health Check up) would they realize the ‘good things’ they have done while investing. And you need to Pat yourself for having done it right!
• Few investors keep invest in stock market without investing !!! They buy stocks hoping that they would rally immediately. When this does not materialize they are forced to square up their position on T+3 or T+5 days. And they could have bought one among the below mentioned stock, but sold off since they did not take delivery (by investing money and taking delivery) of the stock. Such investors need to realize – there is no free lunch. Had they paid and taken delivery, of course with conviction, they would be smiling a lot now.
• Two months back everyone was fearful and pessimistic. Naturally many investors stayed away from market. But today they might 'feel' they made a mistake by not investing. To avoid such situations in future, it is necessary to adopt to some form of investment methods, like the Emotionless Investing Strategy (click here) developed by us @ EASY Investments. It is better better late than never.