Small & Micro Cap Stocks - Will Make Lame Portfolio

It is usual to see gullible, retail and small investors getting attracted to junk, low quality stocks, on tips given by the street smarts. That is the reason we see revival of buying interests in ADAG stocks, BILT, Unitech, HDIL, Zee Media, Dish TV, Educomp & Idea, kind of stocks (list is endless), where even promoter do not know the future of their company and must be laughing to see these innocent (or fools) seen buying them, without checking the fundamentals. We carried last 2 piece on related topics, by taking Videocon case in point.

It is also seen that this phase of market, brings a sudden end of buying in these junkies, as we may now be reaching to climax point. Does it mean that we should exit from this market? Answer is BIG NO.

But now it is the time to look for quality stocks, have realistic return expectations of 12% to 15% annually, which is about 2x of prevailing interest rates. Also, this is the time to have 60% of Blue Chips or Frontliners, or Mid Cap stocks, with proven promoters, with time horizon of 24 to 36 months in PF. Look for quality before buying even 2% of PF of any stock. Also avoid portfolio crowding with more than 20% of all commodity stocks put together.

So a Sane advice to Impulsive Investors - Do not crowd your portfolio with lame stocks.
Otherwsie muddal dhoondate reh jaaoge.  
 
This is not a buy or sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.