There may not be enough fishes at the bottom
Couple of days ago, a friend forwarded the following chart which suggests that small cap stocks may be offering once in many year opportunity, as the value of small cap index compared to the Sensex has fallen to the point from where this index has rebounded sharply on each of the previous three occassions since 2003, when the BSE Small Cap Index was first launched. If the strategy notes for the year 2020 published by various market participants are any indication, a significant majority of the market participants appear inclined towards this view. Since some people have asked, I would like to share my view on this aspect. In my view, this is a purely academic exercise for three simple reasons: 1. There is no mechanism whereby an investor can directly invest in a Smallcap Index. To my knowledge there is no ETF available on the Small Cap index. It is almost impossible for an investor to buy all 60 stocks in BSE Small Cap Index or 100 Stocks ...