Even Big Companies Can Face Significant Losses
Many people believe that investing in popular and high-quality companies protects them from substantial losses. They assume that companies with a strong market share or those within the top 50 stocks are immune to deep corrections. This is a common misconception. Many think that only small-cap or micro-cap stocks are susceptible to such issues, but history tells a different tale.
Big Indian Companies and Their Past Declines
In India, even the largest companies have experienced significant downturns. HDFC Bank once fell by 55%, Reliance Industries declined by 68%, and ICICI Bank plummeted by 82%. Infosys and TCS also saw declines of 83% and 66%, respectively.
Furthermore, companies like ITC, Bharti Airtel, Axis Bank, and SBI have all experienced drops ranging from 57% to 78%. These declines occurred over the past 20 to 30 years. It is important to note that these are just the companies that survived; many well-known names like Unitech, IVRCL, Yes Bank, and Citibank did not make a comeback.
Prominent US Companies Also Encountered Major Losses
This trend is not limited to India. In the United States, major corporations have also faced significant declines. Microsoft fell by 75%, Apple by 82%, and Nvidia by an alarming 90%. Amazon dropped 94%, and Google (Alphabet) experienced a 65% decline. Meta also saw a 77% drop. Even Berkshire Hathaway, Eli Lilly, Broadcom, and JP Morgan faced losses ranging from 49% to 76%. This illustrates that no stock is truly safe from significant downturns, regardless of its popularity or success.
Two Strategies to Navigate Deep Corrections
Investors typically employ one of two strategies when dealing with such corrections. The first is belief-based. Some investors have strong faith in a company’s long-term potential and are willing to hold onto their stock even if it falls by 90%, believing it will recover. The second approach is more analytical; these investors opt to sell when their stock declines by 20% to 35%. They wait for it to hit bottom and then look to buy again once it shows signs of recovery.
Stay Open to Learning
The key is to stay vigilant and avoid becoming overly attached to any stock, regardless of its size or fame. Deep corrections can afflict anyone, so maintaining an open mind and a flexible strategy can help you avoid major losses and build wealth over time.
So, do you still believe in ‘safe’ stocks? Or is risk just wearing a different mask? Share your thoughts in the comments! If this post made you rethink your portfolio, SHARE it with someone else who might need a wake-up call. Thanks for reading!
WeekendInvesting launches – The Momentum Podcast
In this episode of the Momentum Podcast by Weekend Investing, Alok Jain sits down with Mr. Thomas, a passionate retail investor, to uncover his remarkable journey—from exiting the markets at the worst possible moment during the 2020 crash to finding clarity and consistency through momentum investing.
Topics Covered:
✅How a train journey sparked his interest in the stock market
✅Emotional investing mistakes & lessons from the COVID crash
✅Why he shifted from value to momentum-based strategies
✅The Weekend Investing system that gave him peace of mind
✅How he balances aggressive bets with long-term wealth-building
Whether you’re just starting out or navigating your own investing style, this episode is packed with relatable stories and actionable insights.
