Below is a graph from Google trends for the search term “Multibagger stocks”.
The graph basically indicates the interest in the term “Multibagger stocks” over a period of time.
So, as the graph indicates, more users searched the term in Dec’07, Oct’10 and Jan’18. Similarly, the interest in the term was lowest in Nov’08, for most of the 2012 and 2013 and now in 2019.
Frankly, when I started looking for this kind of data, I didn’t expect the graph from Google to prove to be such a great indicator of Investor’s interest in the market and also a great tool for Contrarian investors.
So, what does the graph indicate:
Quite simply, a greater number of market participants look for Multibagger stocks at market peaks than at market bottoms; when it should have been just the opposite.
Consider this, Dec’07, Oct’10, Jan’18 were the peaks for broader markets and also proved to be the peaks for investor’s interest in the markets.
Similarly, Nov’08, 2012, 2013 were the periods when the market was trading at lows, the valuations were down; however instead of more users searching for multibagger stocks, the numbers dropped.
And we all know that those who invested during the lows of Nov’08, 2012-13 made 10-20 times and even more on their stock investments.
As far as 2019 is concerned, as can be checked from the graph, investors have again lost interest in the market while the same was at peak in Jan’18.
While it is futile to predict as to when the broader markets will move up, looking at the past trends, we are probably closer to bottom and the best time to think about multibaggers is when very few are talking about them.
Also, logically, it should not be difficult to imagine as to why the probability of identifying stocks that can deliver good returns (multibagger to say so) has increased: besides growth in earnings, PE re-rating plays a crucial role in achieving higher returns and PEs have contracted in last 18 months.