Echoes of financial market crash uplifts value investors to hunt for multi-baggers

Investing sentiment has significantly jolted across the globe; people are fearful, cutting bets on losses or liquidating position to sit on cash. But investors need to come out of their comfort zone if they are looking forward to accumulate wealth in the ongoing COVID-19-led abrupt slump in the equity market.

Sitting on cash may provide them with a peace of mind at this point of time, but time and again it was proven that no one has actually acquired humungous amount of wealth by operating from their comfort zone. Every legend investors of all time has achieved financial freedom through staggering investments during market crash or economic downturns.

History tells us that after every market crash, equities have come out even more energetic and register new life-time highs, whether it was 2007-08 financial crisis or dot.com bust of 2001.

During dot.com bust (1999-2000), the global markets corrected about 40% and recovered all the losses in the next few years with global indices recording all-time new highs.

In the 2008 Financial Crisis, the market plunged about 50% across the globe and then sharply recovered all the losses with a new all-time high in just one & half year time.

Right now, investors have taken a wait and watch stance for more clarity, but as we have witnessed in the past, if you are waiting for clarity or market to bottom-out, then you may have to pay the price of clarity. Those who were sitting on cash in the 2008 crisis didn't buy till market had approximately doubled in 2009.

The bull-run started after 2008 financial crisis saw the emergence of several multi-baggers like Ashtead Group PLC, Tyman PLC, Howden Joinery Group PLC, Avon Rubber PLCÂ and John Menzies PLC, which surged in between 15-30 times in the next few years.

If we don’t do the smart investment at the moment, we might end up regretting the humungous market opportunities coming across in 2020.

So, what are probable market scenarios for the next 90-days?

Scenario 1. The world will find a cure for COVID-19

Scenario 2. The world will contain the spread of Coronavirus like China has been doing pretty well.; also, new confirmed cases are declining in France, the Singapore government has called-off lockdown, but the number of confirmed cases continue to rise in Italy.

Scenario 3. The worst cases, COVID-19 spread will grapple the whole world.

Recently, global markets have plummeted in circuits and in the best-case scenario, it seems that it will continue to move up in circuits till it would not hit a new all-time high. It further looks that the bull rally would discount the next two-quarters of expected lower corporate earnings.

At present, market is discounting confirmed coronavirus cases and deaths toll spread across the world, and the moment we find a cure for this deadly virus; the market is most likely to surge to celebrate lives regardless of one or two-quarters of unfortunate corporate earnings.

The prevailing mayhem is providing great market opportunities to accumulate wealth. The stampede has eroded value of not just mid-caps and small-caps, but quality bluechip companies have also succumbed to either a 52-week lows or multi-year lows, running in equal pace.

Amidst this crisis, UK major FTSE 100 index has tanked approximately 22% since the first COVID-19 case reported in the UK on 15th February 2020 and tanked about 27% on a year-to-date basis. There are 46 FTSE All-Share stocks, which have tumbled more than 50% since the first COVID-19 case reported in the UK and 9 shares have given up more than 80% of their values in the same period. 11 FTSE 250 constituent have tanked more than 50% during the period under consideration, including several famous names like Marks and Spencer Group PLC, Provident Financial PLC, Royal Mail PLC and Aston Martin Lagonda Global Holdings PLC. Further, multi-utilities business Centrica Plc is the only FTSE 100 constituent company which has tumbled more than 50% since 15th February 2020 to date.

Meanwhile, data shows that there are about 35 large and mid-caps, those have slumped more than 30% since 15^th February 2020 to the last closing. It includes several popular names like Royal Dutch Shell PLC, Unilever PLC, HSBC Holdings PLC, AstraZeneca PLC, GlaxoSmithKline PLC, BHP Group PLC, BP PLC, Rio Tinto PLC, Diageo PLC, British American Tobacco PLC, Vodafone Group PLC, London Stock Exchange Group PLC and many more. The historical performances of these businesses have proven their quality and growth potential, build upon solid competitive advantages and the management led by sheer genius business leaders with a proven track record.

Here, we are sharing full-list of Large and Mid-caps tumbled more than 30% since 15th February 2020

Source: Thomson Reuters

One should set the needle on quality companies available at a steeply discounted price with dirt-cheap valuations and get hold of those stocks to benefit in the next bull-rally, which seems not to be too far. Some of your shopping at LSE amidst free fall in the market could turn out to be a multibagger in few years.

And, we need to remember what Warren Buffet, an all-time luminary investor in equity market, said: “Be Fearful When Others Are Greedy. Be Greedy When Others Are Fearful.”