However, the answer – however comprehensive – isn’t necessarily one or the other, or a zero sum game.
Nor is it taking a blind “dartboard” approach to stock picking, or diversifying to such an extent that even if one pick skyrockets.
In this strategy, there is little upside to the individual investor because the stake held in the surging counter is so insignificant.
Instead, a successful sharebuying strategy is more likely to be a healthy and risk-sensitive admixture of the two within a diversified and sustainable portfolio.
However, longer-term thinking investors should start being more bullish on growth or growth potential stocks over value stocks.
The new national government in Beijing has repeatedly stated that steady economic growth was one of its top priorities.
Chinese presidents, premiers and Cabinets are typically given around a decade’s time to leave their mark on history.
Therefore, with Beijing’s strong pro-growth policies, its repeated calls to pursue the “Chinese Dream” including helping bridge the growing economic divide, and outright support for several key industries, growth stocks should be the key component of investors’ portfolios over the next few years.
Thanks to the supportive incubator that Beijing is helping set up, growth stocks are likely to outperform value stocks, cyclical stocks and even blue chips in the years ahead.
Therefore, in many cases, policy will be a better guide and a more reliable driver for share prices than even core financial performance.
One of the most useful offshoots from the Wall Street meltdown in the summer of 2008 was the way in which it revealed in full splendor China’s dangerous overreliance on foreign consumers.
When wallets stopped opening in North America, Europe and Japan, export orders dried up seemingly overnight.
Not only did this reveal a perilous overcapacity situation in Chinese factories, but also left provincial governments saddled with new and crippling debt from pre-Crash overinvestment.
'via Blog this'
No comments:
Post a Comment