article 3 months old

Your Editor On Switzer: ‘Cheap’ Does Not Equal A Bargain

FNArena Talks | Mar 31 2015

Investors are too focused on finding “cheap” stocks in the Australian share market, argues FNArena Editor Rudi Filapek-Vandyck. He points out there is one very good reason as to why “cheap” stocks end up being “cheap”. They have a problem. Many “cheap” stocks have not performed well throughout the years behind us, he observes, occasional brief rallies notwithstanding.

On the other hand, stocks that do perform and do so consistently end up being “expensive”. But does this make them a bad investment proposition? The FNArena Editor disagrees that “cheap” is always better than “expensive”. As a matter of fact, he announced investors can now invest in a Model Portfolio that is based on his research into All-Weather Performers. This Model Portfolio has performed well since inception in late 2014. And none of the All-Weather stocks involved is “cheap”.

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