Why do we need to find the Best Stocks in a Bear Market ?

April 4, 2019by Blair Dane0

The following is an extract from our Monthly Newsletter from the AAA Profit Analytics Pvt. Ltd. Research Desk.

We at AAA Profit Analytics Pvt. Ltd. have always spoken about stocks which don’t fall in a Bear Market or in a sideways Market. These are actually the stocks to be into for the Next Cycle. We believe Falling periods in Markets are the biggest source of Winners for the next Bull Market.

In this study, we tried to look out for companies which hadn’t fallen a lot or were actually flat, when markets were correcting in different Periods. The hypothesis is that our chance of winning has to improve significantly for the next Bull Market, once we know who the winners of the Bear Markets are.

In this study, we tried to compare returns of the Market and Leading stocks in the Bad times as well as the Good Times. And, how better are the probabilities of catching Multibaggers out of the Winners and Losers of the Bear Market.

Our identification starts as soon as the Market Bottoms and how some of the Stocks between the top and bottom of the Market Cycle has performed, which is at “Point A” of this chart. (of course, this market pin-points are with a lot of Hindsight bias)

By the time, the Markets bottoms, which are supposedly down by 20-25%, the leading stock of the next cycle will be high by 35-40%, which is an out performance of 55-65%, which is huge.

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