Looks like bubble getting formed in MidCap stocks and Small Cap stocks when compared EPS and PE ratios and stock prices will fall sharply during corrections

Looks like bubble formed in MidCap stocks and even in small cap stocks when compared PE ratios of stock and EPS of stock during the current rally. Mainly beginners in the stock market enters by seeing news floating in Social Media.

Over 70% of people will lost money in stock markets because they will invest by news of rally in stock markets in social media and also by seeing some of there friends making money and they will be trapped during corrections and without seeing company details in depth. Market will not give chance to proper exit during fall.

Post rally generally 25% to 50% of the gains will be erased during fall. Some stocks will correct more depend upon stocks specific weakness and strengths.

Just study minimum how much annual EPS of share, year over year anticipated growth, how similar stocks doing in the market, Company management, projects pipeline, Book Value. 

What is the second reason to purchase the company share without thinking of general first reason there is probability that some other person will purchase the share at higher price.

High PE for Exceptional stocks which can grow at 30% to 50% in terms of net profit is acceptable but even stocks which had not decent growth % year over year, those prices were inflated.

Generally what will happen is post rally if some big investors or funds plan to offload few company shares, then the stock price fall will be steep. Even post rally some investors will plan to withdraw funds from mutual funds and institutes. Then also stock prices will fall because to pay to investor, the mutual funds and institutes had to sell some shares.

So don't invest in stock markets by taking loans. During stock market prices fall that will be a double burden.

Disclaimer: We are not part of any global stock exchange related registered financial advisor. Please do your own research before investing.