‘Shittier than platform & chemical bubble of 2021’: Market analyst warns correction worse than 2022 crash

The ongoing market correction is hitting investors hard, with some stocks facing declines that could take years to recover, according to SEBI-registered analyst Kumar Saurabh. He warned that the downturn is "brutal than 2022," and many stocks that saw exponential gains in recent years "never deserved to be at this scale and count."  

In a post on X (formerly Twitter), Saurabh, founder of Scientific Investing, highlighted how some investors reaped 5-10x returns on stocks where the actual contribution to real cash earnings was only 10-30%. He cautioned that those who entered late are now facing severe drawdowns of 70-90%.  

"That's the one reason why this market correction is brutal than 2022. Lot of things which became 5-10x never deserved to be at this scale and count. Last I remember happened with sectors like infra, real estate, execution etc during 2007-11," he wrote.  

Comparing the current downturn to past market crashes, Saurabh said the impact could be worse than the platform and chemical sector bubble of 2021. "Even there, after 4 years, many are yet to recover but this one is more damaging. So, make your own estimates," he added.  

Responding to a user’s comment that even undervalued stocks have taken a hit, Saurabh acknowledged that “cheap become cheaper.” He noted that while companies with actual cash profits tend to recover in the long run, sustainability depends on multiple factors beyond just earnings in a given year.  

"That's why personally, I believe in some market timing in medium term. However, in long run actual cash profit companies do bounce. However, how much sustainable valuation is not a matter of only earnings in given year but many other things," he explained.  

Saurabh’s warning underscores the risks of chasing overinflated stocks and highlights the unpredictable nature of market recoveries.