Brightest burns quickest

Many of you might be familiar with the old Taoist proverb - flames that burn brightest burn quickest. But does this age-old wisdom apply to the markets too?

Since our inception, we have always asked our readers to avoid getting carried away by the noise of short-term volatility. A stock with good fundamentals will sail through the most treacherous of markets. But sailing through is not always enough. Instead of burning too bright and quickly fading away, we want our stocks to give an above-average performance consistently. Sadly, this is not always possible. Often, multibaggers stay muted initially and skyrocket when the market recognises their worth.

However, when the opposite happens, it can be harder to swallow. For example, let's consider a company called ABC Ltd. You invested Rs 100 in ABC 10 years ago. In the first five years, your investment grew to Rs 800, an astounding 51.6 per cent return. However, in the next five years, the value fell to Rs 620 due to the company returning negative five per cent in the second half. Though the gains from the first half took a beating due to the abysmal performance in the second half, your overall return for the entire 10-year period was still an attractive 20 per cent.

A very bittersweet investing journey, indeed.

To discover real-world examples of such stocks, we analysed the BSE 500 index and identified stocks that posted more than 15 per cent return in the last decade but negative returns in the latter half of the decade. For this, we divided the last 10 years into two periods: Nov 09, 2012 to Nov 10, 2017 (period 1) and Nov 10, 2017 to Nov 11, 2022 (period 2). Here are the top 10 companies from the list with the worst returns in the second period.

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