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The newsletter has completed 72 issues, with its share of hits and misses. Though the stock market touched a lifetime high in March, 2015 was a negative-growth year for Sensex and Nifty after three years of positive growth. Many mid-cap and small-cap stocks had made spectacular gains - which made stock selection difficult because finding value was a challenge. The 10 months long correction since Mar '15 has brought down most selected stocks from their peaks – affecting year-end performance. It is gratifying that subscribers have still kept faith in my stock picking abilities.
Those who have been regularly following my blog posts over the past few years already know what kind of stocks to select, and what type of stocks to avoid. The guiding principle is to choose well-managed, financially prudent companies that generate cash from operations, have low debt, give steady (rather than spectacular) returns and have growth prospects.
Non-subscribers may be interested to know how the recommended 18 mid-cap and small-cap stocks have fared during the past 18 months. Without revealing the names of the stocks (it won’t be fair to my subscribers to do so), here is a brief summary of performance as on Dec 31, ‘15:
- 9 stocks have gained more than 25%, of which 4 have gained between 25-50%; 4 have gained between 50-100%; 1 has gained more than 150%
- Of the balance 9 stocks, 2 have gained between 10-25%, 5 have gained between 0-9% and 2 have lost 9-10%
- 17 of the 18 stocks touched higher levels after my recommendations
That may not seem great, but remember that the market has been in a down trend for the past 10 months - thanks to FII selling that affected large-cap stocks the most. So, let me provide a different perspective on the above performance:
By blindly investing (not recommended) Rs 20,000 in each stock and holding on till Dec 31 ‘15, a subscriber would be sitting on gains of close to Rs 114,000 (31.7%) – comfortably outperforming the Sensex (3%), Nifty (6%), BSE Mid-cap index (19%), and BSE Small-cap index (16%).
What is important to understand is that none of these stocks were ‘cheap’ – fundamentally strong stocks rarely are - and some had already run up a lot when they were recommended.
If you wish to add fundamentally strong mid-cap and small-cap stocks with growth potential to your portfolio, why wait? Just subscribe to my Monthly Investment newsletter. Send me an email (at firstname.lastname@example.org) soon – subscriptions will close on Jan 21, 2016.