QUOTE(yok70 @ Apr 6 2013, 03:23 AM)
Exactly the point I want to say.
Say you have 1 million for investment. Will you dare to put 1 million all in betting on those super undervalued low PE volatile cheap stocks? Ends up, maybe you will use 50k to play shoot and run short term game. Maybe you are lucky, they one day shoot up 100%, and you gain 50k from it.
Now, if you buy (good) blue chips stocks, put 1 million all in. They steadily and unsurprisingly gain just a small 10%. That will be 100k gain, which is actually double of that 50k gain. And you can sleep better at night holding some (good) blue chips.
Not saying this is a great method, just sharing some thoughts. I mix around steady growth stocks and undervalued stocks in my portfolio.
IMHO Not all cheap stocks (as in market cap) with low PE is volatile and dangerous to invest. If it is a speculative play then yes it's risky, but there are lots of them with good fundamentals. In fact there are quite a few which graduated to blue chips over time as well.
There is a difference in 'cheap' on valuation, market cap and price. Some of my 'cheap' (low PE) stocks have prices that rival blue chips.
You can find safe, low PE, fundamentally sound companies with low market caps. Not all blue chips are wonderful companies, but you definitely pay higher price for it.
My low pE, low market cap holdings let me sleep at night better, as it is less volatile and have good dividend to boot, so it lets me wait out all the ups and downs.
I like these range of stocks, no need to compete against those 'fun' managers. I am proud to say I never held a KLCI index stock before, as before i find their valuation appalling. If later the value shines, then I might buy some.
P/S Your post is 3.30 am.. no need to sleep ah brother yok.
This post has been edited by gark: Apr 6 2013, 09:36 AM 
Apr 5 2013, 06:50 PM
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