Looking back on my last four years as a small-cap investor, I’ve learned a lot through both successes and setbacks. I’ve been focusing on small-cap companies with market caps between 100-2000 Cr and have avoided SMEs for now because of my portfolio size. During this time, I’ve seen some great returns, including a couple of 10-baggers, several 5-baggers, and a few stocks that have tripled from my buying price. I’ve held on to most of these, but I’ve also reduced or exited a few positions along the way, and in some cases, I’ve taken losses of up to 60%.
One thing that’s become clear to me is the need to know whether you’re approaching the market as a trader or an investor. If you’re trading, you might want to sell or cut back once you hit your target price. But if you’re investing, it’s important to really understand the company and believe in its story. If that story stays solid, it’s often best to hold on. However, when things start to change, you have to reevaluate and decide if it’s time to sell or reduce your stake.
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