Budi Frensidy: stock market performance of LQ45 versus non-LQ45

Repeating the performance of previous years, small and illiquid stocks once again dominate the first 10 winners on the EIB in 2017. The ten stake winners are very likely to never collect: MARK, CLEO, OKAS, KIOS, ZINC , WICO, TOPS, MINA, MABA and TAMU which yield 540% to 3.155% of profit, with an average of 1300.6% or 14 times higher for one year.

I do not intend to minimize your ability as a stock market investor. However, with limited time and money, you can not understand 566 shares that are currently listed. In addition, if you are a pbadive equity investor who only sees casual live trading.

Therefore, guessing the top 10 winning actions or the 20 most profitable stocks, not to mention the champions, is relatively very difficult. I can not. And frankly, among the ten actions above, I do not know much less before gathering them together.

You have a slot machine if you have this ability. Because, you will earn hundreds of percent back every year. However, if the value of the portfolio is large enough, you can only put a small portion of it for the above winners' shares, since the capitalization and daily transaction value of these stocks are relatively small.

The winner is not a LQ45 share. None of the 10 stocks above include the 45 most liquid stocks. Of the value of the market capitalization as one of the good company criteria, none of the top 10 capitalizations of the 50 largest caps on IDX end of December 2017. Most of them are not good because they only have 600 billion Rp.

Under the above 10 shares, there are still 10 shares of other ugly companies that provide a minimum return of 303%. Overall, 20 shares offering a very high percentage of capital gains are not 45 terlikuid shares (LQ45). At the same time, the best LQ45 winners give only the highest gain of 208.5% which is BRPT.

LQ45 vs IHSG

Interested in the performance of LQ45 stocks that rarely appear in the list of top winners, I try to compare the performance of LQ45 with IHSG. Including JCI including LQ45 and non-LQ45 shares, we can also compute the non-LQ45 index change of the same period based on existing JCI and LQ45 indices

Apparently LQ45 index is more often lost than IHSG over the last 10 years (20082017) for seven years. Only in 2014, 2015 and 2017, the LQ45 index outperformed JCI. The most important performance difference of the two indices occurred in 2010. JCI reported a profit of 46.1%, while the LQ45 index was only 32.7% .

The year 2010 deserves to be considered the culmination of the actions off LQ45. Without a big leap in non-LQ45 stock prices that jumped 86.3%, of course JCI will not leap 46.1%. Last year, the LQ45 index beat the JCI from 22% to 20%. This repeated the achievement of the LQ45 index in 2014 which shot 26.4% when JCI only rose by 22.3%. The LQ45 index is slightly better than JCI in 2015, while JCI fell 12.1% but the LQ45 index dropped only 11.9%.

Assuming that the weight of LQ45 shares in JCI is 75% the fourth of 2017, I compile a non-LQ45 index change. In total of 10 years, from the beginning of the year 2008 to the end of 2017, JCI has increased by 131.5% (from 2,746 to 6,356) and the LQ45 index by 79.9% (from 600.1 to 1079.4). the implications of the above results for stock market investors? First, depending on the risks, small, illiquid equity issuers also have great potential. Second, you must always invest the majority of the funds in LQ45 large cap stocks if you are an institutional equity investor who manages public funds or employee retirement plans or corporate cash. A very high risk if you have the illusion of being able to identify the actions that will be the top ten winners and put institutional funds in these actions.

Different conditions for those of you who manage their own funds. Because you do not need to report the performance of investments to others, except you and your family, you are free to choose stocks. Please allocate funds, say 30% for non-LQ45 shares. But, putting half or more of your portfolio in these stocks also I do not recommend, especially if the amount is large, considering the market and its frequency is slim.