I have come across many people saying that mid and small caps may experience a rally soon. Do you think the same?
- Sarvanan
I wish I knew. However, I can tell you that the market cycles of mid and small caps are very long. If you look at how often small caps do well, then you will notice that either they do extraordinarily well or their performance completely goes off for a toss. There is nothing in between.
Small caps could go up even by 100 per cent in a year, as happened in 2017. Being regular with your investments and doing an SIP in these funds is the only way to make money out of these funds. Money cannot be made by just investing at the peaks. Continuing with your investments even when the fund is struggling is an act of courage. And if you start an SIP now with a horizon of three to four years, you will be able to get extraordinary returns. Also, having belief in your ability to withstand these declines is important. So, there is hope and it is not that small and mid caps are to be written-off forever.
This article was originally published on July 29, 2019.
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