Every crisis brings with it opportunities to make a lot of money if you pick a winner. A seasoned fund manager and I were having lunch recently and he mentioned that the “BIG” one in the 1997/98 financial crisis was Tan Chong International……Big to him meant that the stock went up at least 15 times. The chart below shows what he meant.
The stock went from a low of S$0.13 to a high of S$2.70 with 12 months of the market bottoming – a 20 bagger. This is a high risk investment but with high returns and not for the faint hearted. If you invest in depressed blue chips in this crisis – chances are you will triple your money when the market turns and if you dont sell too early in the rebound. So maybe a conservative investment strategy is to invest 80% of our intended equity portfolio in blue chips and 20% in the “BIG” one.
The question I am asking myself and you my Blog readers is which is the Big One for 2009. I am looking but would welcome investors to contribute their ideas and thoughts on which stocks they think can be considered the next Big One and why and when this will occur. For me, this group will probably be small or mid cap stocks which have fallen at least 90% from their bull market highs on fund manager redemption in a thin market. Fundamentally their balance sheets should be sound preferably in a net cash position which can last them at least three years because that is how long this crisis could last……hopefully in the coming weeks leading to the bottom of our market which I expect will be in Q3-2009 – we would have identified a group of stocks that fit this bill of the Big One so that we can on our own assessment decide which one it should be…….happy searching.
Source: NRA Capital – Kevin’s Blog
Candidates for the next big one