WILL HISTORY REPEAT ITSELF?? PART 1

Stock Markets, as all of us know, are cyclical; highs and lows are as inevitable as death itself. However, the challenge for Retail investors is to somehow try and catch the lows so that the Portfolio is always in the money. This , of course, is easier said than done since at the lows there is a slew of negative sentiment in the Market which scares away the Retail investor from entering. And more often than not, we too refuse to learn from history and hindsight. Anyway, in this Post, I just steered back to the market meltdown of 2008 and the subsequent Recovery with a focus on trying to outline the kind of returns which the broad INFRA/CAPITAL GOODS/CONSTRUCTION Stocks gave then for those lucky few who entered at the lows in 2008-2009. The results are stunning, to say the least:

• The larger cap stocks like ABB, SIEMENS, LARSEN, BHEL gave returns of 177%, 304%, 297%, 144%  respectively from their Meltdown lows to their highs 12-18 months later.
• The mid-cap segment like GMR, GVK, LANCO, IVRCL gave returns of 216%, 381%, 637%, 556% respectively from their Meltdown lows to their highs 12-18 months later.
• Others like BGR ENERGY, MADHUCON PROJECTS, GAYATRI PROJECTS gave returns of 703%, 771%, 1080% respectively from their Meltdown lows to their highs 12-18 months later.
• Stocks like ACE, GAMMON INDIA, HCC, JP ASSOCIATES, NAGARJUNA CONSTR, SIMPLEX INFRA, PATEL ENGG gave returns of 737%, 375%, 428%, 474%, 441%, 449%, 350% respectively from their Meltdown lows to their highs 12-18 months later.
• Stocks like ALSTOM, AREVA, CUMMINS, ELECON, EMCO gave returns of 219%, 138%, 450%, 329%, 315% respectively from their Meltdown lows to their highs 12-18 months later.

The List, by no means exhaustive, is presented below for the perusal of Readers. (to be read as STOCK NAME, MELTDOWN LOW DATE, LOW PRICE, SUBSEQUENT HIGH DATE, HIGH PRICE, PERCENTAGE RETURNS):

• ABB 2/3/2009  343   4/10/2010  953    177%
• ABG SHIPYSRD 2/2/2009 62 8/11/2010 484    680% 
• ACE 4/3/09   8.6   3/9/10   72    737%
• AB NUOVO 12/3/09 330 12/3/10 860    160%
• ALSTOM PROJECTS 24/10/08 191 20/10/09 610    219%
• AREVA T&D 2/12/08 130  1/12/09 310       138%
• BHARAT BIJLEE 12/3/09 301 22/7/10 1316          337%
• BEL 26/11/08 545 22/3/10 2252      313%
• BEML 3/12/08 280 19/1/10 1275     355%
• BGR ENERGY 9/3/09 107 7/9/10 860     703%
• BHEL 19/3/2007  194  29/2/2008  473   144%
• CROMPTON 26/3/09 57 24/11/10 343    501%
• CUMMINS 9/3/09 105 10/11/10 578        450%
• ELECON 12/3/09 24 15/10/10 103      329%
• ELGI 28/10/08 14 22/11/10 104       642%
• EMCO 6/3/09 26 19/1/10 108        350%
• FINOLEX IND 12/3/09 25 10/11/10 127    408%
• GAMMON INDIA 2/12/2008 52 18/10/2009 47    375%
• GAYATRI PROJECTS 9/3/2009 42 19/5/10 496    1080%
• GMR INFRA 29/10/08 24 16/10/09 76     216%
• GVK POWER 3/11/08 11 19/11/09 53      381%
• HCC 12/3/2009 14 5/3/2010 74   428%
• HEG 31/3/09 94 9/4/10 377    310%
• INDO TECH TRANS 19/11/08 175 4/12/09 377     115%
• IVRCL 24/10/08 32 16/10/09 210    556%
• JP ASSOCIATES 28/10/2008 31 20/10/2009 178   474%
• JYOTI STRUC 24/10/08 32 14/1/10 193      503%
• KALPATARU POWER 6/3/2009 44 3/2/2010 235   434%
• KEC 12/12/08 22 18/1/10 126    472%
• KEI 5/3/09 8 18/1/10 43     437%
• LANCO 24/10/08 8 4/12/09 59     637%
• L&T 9/3/2009 557 4/11/2010 2212     297%
• MADHUCON 26/11/08 21 8/12/09 183   771%
• MUNDRA 22/11/08 50 18/1/10 132    164%
• NAGARJUNA CONSTR 9/3/09 36 30/4/10 195    441%
• PATEL ENGG 16/3/2009 104 12/4/2010 469   350%
• SIEMENS 27/1/2009 186 29/3/2010 753     304%
• SIMPLEX INFRA 9/3/2009 102 18/1/2010 560     449%

Of course, Readers should keep in mind as a caveat, that no two turnaround Cycles are quite the same; the Market and Economic Macros now are not quite the same as they were in 2009-2010 when the last turnaround happened. More about that later. In the meantime chew on the above stats!!!!!

Happy investing!!