We have always spoken about stocks which don’t fall in a Bear Market or in a sideways Market. These are actually the stocks to be into for the Next Cycle. We believe Falling periods in Markets are the biggest source of Winners for the next Bull Market.

In this study, we tried to look out for companies which hadn’t fallen a lot or were actually flat, when markets were correcting in different Periods. The hypothesis is that our chance of winning has to improve significantly for the next Bull Market, once we know who the winners of the Bear Markets are.

In this study, we tried to compare returns of the Market and Leading stocks in the Bad times as well as the Good Times. And, how better are the probabilities of catching Multibaggers out of the Winners and Losers of the Bear Market.

Our identification starts as soon as the Market Bottoms and how some of the Stocks between the top and bottom of the Market Cycle has performed, which is at “Point A” of this chart. (of course, this market pin-points are with a lot of Hindsight bias)

By the time, the Markets bottoms, which are supposedly down by 20-25%, the leading stock of the next cycle will be high by 35-40%, which is an out performance of 55-65%, which is huge.

As soon as the Market recovers to the older highs, the Leading stocks will be higher by 200-400% from the previous Market Top.

Even, post the Market Recovery, the Leading stocks will broadly add another 200-300%.

The Bull Market will broaden, it will take a lot of Crappy stocks higher, while the Leading stocks will take a pause and Consolidate around the Lifetime highs.

As the broader market froth up, and market hits a jitter, the Leading stocks continue to lead again in the Market.

The Broader idea is do we have a better chance to catch the Winners of the next Bull Market, if we already know which are the winners of the Bear Market.

In our methodology, we have looked at various bear markets, or large bull market corrections which were in excess of 10% and periods exceeding for 3 months. We filter out the stocks which were positive or hadn’t fallen (<10% fall) during the falling market till the Market Bottom was made.

This is an illustration how we have calculated returns for Winning stocks or Losing Stocks