2018-2020 was not in a real sense a bear market, if you take out the Covid crash which lasted a few weeks. INifty ndex managed to remain within a range of around 12000 on higher side and around 10000 on the lower side. But the bear market happened in small and midcaps space.
During the aforementioned period, stocks like Bajaj finance went up nearly 2.5 fold from 1800 to 4800, Page Inds went up from 18k to 36k, Titan nearly doubled, Bata, Relaxo etc also nearly doubled or more, etc. So the so called consumer facing businesses which were supposed to have a long runway for growth ( the theme was growth forever in companies like the chaddi-banyan companies and others too, and the oft repeated argument was per capita use in US vs per capita use in India and so on) were the big winners.
Most of them had negative working capital ( or very favourable working capital) cycles, decent or better than decent ROEs, debt free or cash rich balance sheets, free cash flow generating business models. That was the theme at that point of time, and valuations had reached crazy levels because of these kind of justifications.
Each bull phase has its own flag bearer sectors and stocks and the narrative around them is always compelling enough to justify the valuations accorded to these sectors and stocks.
Who knows a few years from now, we might be talking about currently fancied sectors and stocks in the same vein, once the fancy has subsided and stock prices have corrected.
Market participants always tend to confuse flavour of the season ( which last for a few quarters to a few years ) with perennial winning stocks. There are only a few companies which merit a buy and hold for decades tag. And there too there will be periods of underperformance.
Recently after looking at fantastic results of PI inds during last quarter, I was looking at the wealth created by it. If price is adjusted for splits, etc, stock price went up from around 100 in 2012 to current levels of 3600 in 2024. In fact it hit 3500 in 2021 and has been going above and below that level. So we can consider a rally from 100 in 2012 to 3500 in 2021, which provides 35 times returns in 9 years.
Against that consider Laurus labs which went up from 125 ( crossing its previous ATH in 2020) to 720. And lets consider that someone could not buy near bottom and could not sell near top. Even adjusting for that it went up nearly 5 times within 2 years. And recently HBL went up from levels of 80 in June 2022 (after having crossed previous ATH) to 600 in Feb 2024, which is nearly 6-7 times in less than 2 years. If someone had bought Laurus, and HBL back to back, then money would have gone up nearly 30-35 times in less than 4 years.
So someone who kept on doing stock research to uncover future winners, made nearly same amount of money within 4 years that PI made for its investors in 9 years. But those who held PI were unworried about thinking about exits, and bear markets that came through in between. But these kind of stuff has a lot to do with investor mindset.
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