Multibagger - In the time of uncertainty


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A multi-bagger stock is an equity stock which gives a return of more than 100%. The term was coined by Peter Lynch in his 1988 book, One Up on Wall Street and comes from baseball where “bags” or “bases” that a runner reaches are the measure of the success of a play.

Everyone has there own definition of multi-bagger. Essentially the majority of people look for multi-bagger which multiples itself in a very short period of time. Otherwise, even a fixed deposit which is there for a few decades could be called a multi-bagger.

Google which is one of the most searched search engines could be treated as a barometer for drawing conclusions as to what people are looking for.

The term multi-bagger has similar varying results.

Now if you look carefully most of the time when the market is distressed the majority of investors are not interested in investing in the stock market. Most of them are retail investors.

If you look at the chart of nifty immediately after the index has given good run-up the number of searches for multibagger stocks has risen drastically. Be it the end of 2014 or even for that matter 2017.

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Reason for this is when the majority of retail investors hear from others that they have made money only then do they get interested.

Market rests after the huge run up in the short duration. I remember many clients had come to me to invest in mutual funds or stock market at the beginning of 2018 rather I had spoken to them in the early 2016’s and most of them didn’t consider that as an opportunity. Those who consulted us where all told to put the money in a debt fund or Fixed deposit.

Many ignored and bought stocks and mutual funds only to understand later that the stock market is not rewarding. When these retail investors lose patience and exit the stock market again they would get to see others making similar returns.

The above is the video when Mr. Rakesh Jhunjhunwala himself talks about the Mid Cap stock market and how it impacts the investors. Be it small-cap or mid-cap the investors who are invested in all the market cycles are to get the maximum benefit.

Now, where do the retail investors go wrong?

Timing the market.

Most of the retail investors always look at timing the market. The real mantra to succeed in the stock market instead of timing the market spend a lot of time in the market.