Topic: How To Invest

What is Pat’s commentary for the week of June 22, 2021

Article Excerpt

Lately I’ve seen a number of favourable media comments about “the value trade”—brokerese for “now that techs are taking a breather, it’s time to sell some of your tech stocks and buy some value stocks.” The term “value stocks” refers to stocks that have below-average P/E ratios and other statistical measures and indicators that appeal to investors who are in search of investment bargains. We have qualms about that advice. Value investing is the practice of zeroing in on stocks that appear to be cheap in relation to earnings, assets or both. The trouble is that stocks that seem cheap are, more often now than in the past, signalling danger rather than a bargain. Investing has come a long way  In the 19th century, statistical measures and indicators were much less widely available than today. Disclosure laws and accounting standards were primitive by modern standards. Back then, investors chose stocks to buy based on dividend history and current yields, plus optimistic assurances about the…

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