Very nice contribution, I am currently betting on undervalued stocks to take advantage when they reach their fair value again
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@Habicht128 Legitimate strategy! Buffett made a fortune this way. However, he also says that nowadays the information is so well distributed that a normal private investor is best off with 90% S&P500 and 10% TBills - as he also stipulated in his will.
The problem with the value strategy is the underlying assumption that the market misprices certain stocks and that you yourself can recognize what the market does not recognize. Some will be found, others are rightly valued low (e.g. Porsche two years ago) - in the end you have to diversify and enjoy the market return.
My tip would be: value strategies still work well in inefficient markets, e.g. emerging market small caps. Everything else has probably been grazed.
The problem with the value strategy is the underlying assumption that the market misprices certain stocks and that you yourself can recognize what the market does not recognize. Some will be found, others are rightly valued low (e.g. Porsche two years ago) - in the end you have to diversify and enjoy the market return.
My tip would be: value strategies still work well in inefficient markets, e.g. emerging market small caps. Everything else has probably been grazed.
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•@Epi yes you are right on all points, let's see if my strategy with mostly small caps works out
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