Time to bring Long-Term Investing Back! - Part 2

 


 

In my last post, I had mentioned Mutual Funds as a route to bring Long-term Investing Back. Another route that I had mentioned was through Direct Equity. Even under Direct Equity, there are various stocks that you can invest in. The investment universe under equity stocks is around 5000 listed stocks on BSE itself. How do you figure out which ones to invest in and which ones to not. Well, for that I had given an extensive Equity Checklist in my old blog posts. (They are only specific to Midcap/Small cap/Microcap Stocks and not applicable to Large cap stocks as they’re sure shot fundamental bets and that’s why they are Large caps :P).

Expanding more on the Equity Checklist (Qualitatively), I recently attended a webinar on Surviving & Thriving in the Small Cap Space organized by Smart Sync Services (Ankit Kanodia) with the Guest as Ayush Mittal.  Very useful insights were given by Ayush Sir in the webinar.

Ayush Sir suggests that Small Cap Investing requires a lot of patience and the conviction to hold the stocks for a good period of time which maybe 5-10-15 years (As the heading suggests, long-term investing works best in small cap companies). In order to hold them for a long period of time, your conviction in the stock should be high which can be established through extensive research. A thorough Fundamental Analysis with the help of the Equity Checklist can help you build that conviction. A small cap company with an economic moat and strong competitive advantages should be preferred for investing.

Small Cap Investing does have its own challenges. As these companies are small (under researched as well), there might be limited information available in the public domain. This can be overcomed by either sending mails to the investor relations contact of the company and asking for relevant information or visiting the business premises physically to get more information. This will help build a better conviction and also help you understand the future prospects of the company. This might help you identify a good opportunity in the space.

Reviewing is an important activity that should be done on a quarterly basis (usually around the results season because management also provides some kind of guidance on the future) and rebalance is necessary.

I would like to give my own example in this context. I had identified a stock named BLS international on which I had written a Blog Post “A stock that gave me 150% return”. This is my story on Thriving and Surviving the Small Cap Space.

Hope this Blog helps you in creating your own Wealth in the Small Cap space!!!

Happy Investing!!!!!

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