When investors worry about risks in equity investing, it is not a 15 per cent or 20 per cent correction in stock prices (which is a common occurrence) that keeps them awake at night. What they really fear is losing 50-90 per cent of their capital in shares that sink like a stone, which they never recover. One reason this happens is worsening fundamentals. When a company loses customers, is hit by regulation, takes on too much debt or makes diversification or acquisition moves that backfire, this destroys its financials and tanks its share price.

However, in bull markets, there is another reason why some stocks tank 50 per cent or more. This is when hype about a business, promoter or market opportunity props up their valuation so much that when normalcy arrives, the stock falls off a cliff

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