Biggest opportunities are born during maximum pessimism

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March 8, 2022

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Strategic Alpha

Dear Long Term Investor,

Biggest Opportunities Are Born During Maximum Pessimism.

Ukraine-Russia Crisis! It seems to be the talk of the town today. There is Panic all over, Nifty has fallen 15%, Nifty Midcap Index has fallen 21% and Smallcap Index has dropped 21% from the recent top. Some of the Individual names have fallen 40-60% from the top.
FPI’s have sold USD10 Billion worth of Equities, this is the highest number after the 2008 Subprime Crisis. This is what Nilesh Shah has shared on his Twitter handle.

All these news scare us and keep us out of the market when there is an opportune time. FPI’s reason for selling is most of the time tactical, Tactical investing responds to market conditions. It looks at the present and the near future. A tactical investor attempts to shift the composition of a portfolio to manage risk exposure or to take advantage of new opportunities and most of the time it has no correlation with the country’s fundamentals. Such a type of selling by FII/FPI can create a great opportunity for people like us who can look beyond 6-8 quarters, most tactical investors look at the next 1-2 quarters, if we can look beyond that, we are able to beat the competition. As long as the business which we are buying has all ingredients of deep value, providing a margin of safety and growth potential, we shouldn’t be worried about who is buying/selling.

To give a more perspective on past Such falls and how markets have recovered over the next 12-14 Months Period, just look at this data.

 

However, Just the above data is not enough to build the investment basket. This time there has been a greater sector rotation that is happening. After every fall has completed and during recovery, some set of sector leaders emerge and they have the potential to create fortunes if we are able to cherry-pick some stocks rightly from the sector leaders. To give more perspective on this you can read this blog which i wrote in Feb 2021 this will help to understand the importance of sector rotation and sector leaders.

To give you a perspective on Sector Rotation- Nifty Metal Index has shown super strength this fall. Where Nifty has fallen 15% from the top, Nifty Metal Index is trading near all-time high levels. This is a clear indication of a sector leader.
This is one such sector which I found, however, there can be many micro themes as well like one can keep an eye on PSU Index above the resistance zones.

Companies that are part of the BSE PSU Index or Nifty PSE Index.


If we can find some of the great winners out of PSU Index, It will be an excellent choice when the Nifty PSE or BSE PSU Index is Breaking out. Look for Margin of Safety, as Not Losing should be the first criteria overall giving an opportunity to play “Heads I Win Big, Tails I lose Small”.

Nearly every opportunity that later transformed into a successful endeavor was first found in a moment of adversity or to fill a need.
The situations we deal with on a regular basis are nature’s way of providing us with opportunities. Think of the various hardships that you have faced over the years, both large and small. How have they changed you? How did you work to alleviate the afflictions of yourself or those around you? Think back to when you first were learning how to ride a bike. Remember all the skinned knees and false starts, slamming on the brakes too hard because you were so nervous? Remember the feeling you had, that exhilaration you felt when finally, finally, you could race down the street without the training wheels?
Current Consider Current Market Situation the Same. Embrace the current volatility to your benefit. As Ramesh Damani says, there is always a Bull Run in some of the other Markets in the world. Our job as a TechnoValue Investor Is to spot it Increase the allocation towards the leaders and Reduce/Exit the Laggards✅

On the same note, I will be taking a live workshop on TechnoValue Investing which helps to navigate stock markets successfully with conviction and clarity. As Warren Buffet says “The more you learn, the more you Earn”, This workshop will provide you with a great learning experience from my past 14 years of journey in stock markets. Click here if you wish to attend the upcoming workshop.

Very important note: The objective of this blog is to share knowledge and info about multibagger ideas/opportunities. Neither is this trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your homework, own analysis, and make your own decisions.

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The author of the blog Mr.Suyog Dhavan is a Full-time Investor / Value Trader and Value investing/Trading Mentor. His style of Investing is inspired by Mohnish Pabrai, Peter Lynch, and Porinju Veliath. He is the founder of Strategic Alpha Wealth, A Premier stock market mentorship firm with a mission to touch the lives of 1Lakh people through its mentorship program.

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