Common Mistakes Investors Make When Chasing Multibagger Stocks

1. Common Mistakes Investors Make When Chasing Multibagger Stocks Stock trading is something that requires knowledge, patience, and most importantly, the implementation of the right strategy at the right time. Among many types of stocks and other investment assets, you must have heard about multibagger stocks. These are penny stocks that drive high returns, often multiple times higher than their acquisition costs. So, multibagger stocks become a preferred choice for investors who are looking for exponential growth in the market and want to create a fortune through stock market investing. However, there are some common mistakes that many investors tend to make when chasing multibagger stocks. If you make these mistakes, you might not receive as high a return as you expected. So, try to avoid the following mistakes if you want to make the most out of multibagger stocks: 1. Choosing Stocks That Have Already Gone Up If you are choosing a stock that has already had its price increase by 3-4 times, you are probably making a mistake. You need to invest in multibagger stocks when they are not known by anyone or are not in the limelight. Once a multibagger stock is popular and has already gone up, it’s probably too late to invest in it. Your goal should be to identify these stocks before analysts or other institutions can. If you are investing in multibagger stocks that have already reached 4x their original value, maybe the stock is about to reach its highest or has already reached it. 2. Choosing Stocks Held by Mutual Funds Another mistake that many investors tend to make is choosing mutibagger stocks that are held by mutual funds. Again, keep in mind that once a multibagger stock is popular, it’s no longer wise to invest in it. If you are investing in penny stocks that are already there in mutual fund holdings or are held by some other institutions, you won’t be making a fortune out of it. Mutual funds are always late when it comes to investing in multibaggers, says Suyog Dhavan, the founder of Strategic Alpha. 3. Paying High Equities Multibagger stocks usually have low equity prices, and hence, you are paying very high equities; maybe it’s not a multibagger. It’s not that you should completely ignore a potentially beneficial stock if its equity price is high. But go for such a stock only if all other factors seem fine and if you see a really good profit-making opportunity there.

2. 4. Investing in The Stock and Not in The Company When investing in stock, you should always think about the company behind it. If a company is doing very well and its stock price has not moved in years, it may go up and become a multibagger. It might not have performed well due to the underperformance of the entire sector or industry, but once the sector is in demand, the stock may give multifold profits to its buyers. Look for sectors that are likely to boost or perform better and invest in companies from that sector. Try to choose the best company in its segment or the second best. 5. Trading Without Learning Keep in mind that learning is essential in the stock market. You need to learn stock market basics before you enter the market, and even after you start investing, you have to keep learning. There is always more to learn. Before you chase multibagger stocks, learn in detail about what these stocks are, how to identify them, and what the right strategy is to invest in these stocks. You can learn trading basics by joining courses or live workshops held by platforms like Strategic Alpha. For continuous guidance and mentorship, you can also join their community called Conviction Club. Concluding Thoughts Now you must have understood all the things you need to keep in mind when choosing multibagger stocks for investing. Identify stocks that are not in the news or media so far but have a high potential of going up and giving high returns. Once analysts start looking at these stocks, and they are published in newspapers or news, the stocks are already in the limelight and their prices have probably gone up. So, it’s not just that you need to identify the right stock, but you also need to identify it at the right time. If you are a beginner, it’s common for you to feel confused and overwhelmed when trying to invest in multibaggers. In such situations, having the right mentor can help you. You can attend online workshops, webinars, etc, to learn more about the basics of investing, and for mentorships, you can join the Conviction Club, a community of investors and mentors created by Strategic Alpha.