Are you Missing this Profit Opportunity Like Other Robinhood Investors?

Aug 21, 2020

Editor's note: In this edition of the Profit Hunter, we bring you an extremely relevant piece authored a month ago by our ace chartist, Apurva Sheth. He was very bullish on smallcaps back then and the market has proven him right. This editorial is just as relevant today. It's not too late to buy high quality smallcaps with multibagger potential. Read on to find out more about this exciting money-making opportunity from Apurva.

Apurva Sheth, Editor,Profit Hunter Pro
  • 'Bulls make money. Bears make money. Pigs get slaughtered.' - Wall Street saying

Bulls make money in a rising market. Bears make money in a falling market.

But pigs don't make money in any market. They take high degree of risk or overlook risk entirely to make profit.

It's a pity but most retail investors have often ended up like pigs waiting to be slaughtered.

But not anymore.

A new breed of retail investors has emerged in the Covid era.

These are Robinhood investors who took the plunge after the markets crashed in March. They showed faith in the most difficult of times. The market is rewarding them handsomely now.

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However, it seems to me they could be missing out on some amazing profit opportunities.

An interview of Nikhil Kamath, head of Zerodha, one of fastest growing discount brokers, caught my attention.

Zerodha opened nearly 3 lakh accounts out of the total 1.2 million new demat accounts opened in March and April 2020.

Kamath said, the list of most popular stocks amongst the new entrants is dominated by large-cap companies like Infosys, Reliance, SBI, and HDFC Bank. We see a flight to quality, and investors are moving away from small-cap and penny stocks, ignoring SMS tips etc.

It's a good thing that investors are moving towards quality. But all large-cap companies aren't necessarily good quality companies.

I believe the retail investors could be suffering from recency bias. The new investors have seen the outperformance of frontline stocks over the last couple of years. Smallcaps have underperformed especially since January 2018.

Unlock Now: India's 3 Unstoppable Tech Stocks

But thinking that smallcaps will continue to underperform could be the biggest mistake these new Robinhood traders might make.

I believe this could be the best time to invest in smallcaps.

Check out my YouTube video where I use a techno-funda approach to show you why.

Just like all large-cap companies aren't good, all smallcap companies are not bad.

There are several smallcap companies which have performed well after the lockdown. Unfortunately, shady stocks get most of the attention.

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At Equitymaster, we have always recommended to steer clear of such stocks and we will continue to recommend you avoid them.

But what is more important is that you must not ignore all smallcaps.

There are good-quality, fundamentally strong smallcaps which have the potential to do well now.

The problem is most Robinhood investors don't know how to find these stocks. Therefore, they never think beyond largecaps.

It is okay to go with largecaps if you are happy with average returns. But if you want multibagger returns from stocks, then smallcaps is the place to be.

Fortunately, you don't have to look too far to find these good quality smallcaps.

Richa Agarwal, editor of Hidden Treasure, our small-cap stock recommendation service, will find them for you.

In fact, she has found one stock she is super excited about. She calls it a Crorepati stock.

She will you all about it at the One Stock Crorepati Web Summit at 5 pm on 27 August.

I recommend you attend Richa's online summit from the comfort of your home. We're expecting an audience of over 10,000.

Book your free seat here.

I am confident your perspective towards smallcaps will change for the better and you will be on your way to multibagger profits.

Warm regards,

Apurva Sheth
Senior Research Analyst, Fast Profits Report
Equitymaster Agora Research Private Limited (Research Analyst)

PS: On 27th August, our small cap editor, Richa Agarwal, will reveal her best recommendation - her crorepati stock. Join Richa at the One Stock Crorepati Web Summit to get access to the only stock you need in the long-term to become a crorepati. Get your free tickets here.

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