The market never favors Growth and Value at the same time. A key here is to make sure you are investing in growth BEFORE the market turns to growth. At the same time, you can make money by investing in VALUE stocks before the market turns to growth. These are some important things that one should know in order to make money.
What is value investing in Singapore? In technical terms, it refers to buying only those stocks with a low price to earnings ratio or low price to book ratio and high dividend yield.
Generally, value stocks are the companies that people probably use every day and are reliable and stable so, investors do not think twice about them.
On the other hand, growth investing is exactly opposite. Usually, these stocks do not pay a dividend. Such stocks are expected to grow at an above-average rate relative to the market.
Growth stock companies do not rest on their successes. These companies often bring out new products and their stocks can be flashy and mostly “hit&run”.
When Should I Buy?
Most people are afraid of losing their jobs when an economy slows down because people tend to spend less money. Consumers stick to the basics and do not buy new products. The government may be worried about a recession and their lower interest rates.
In such an economy, value stocks are considered a safe haven. Going on further into the next years, the government may continue to lower the interest rates and will try its best to get the economy moving.
What value stocks should you buy in a slow economy?
The answer is, “do research”. It is advised to think of the items/products that you will not stop using. Where do you shop during a strong economy versus where are you shopping nowadays in a slow economy? These companies that continue moving during a market downturn are some of the best companies to own.
After reading this article, you now have a better understanding of how the market works. Investment courses are another great way to learn more about different investment strategies and you are highly advised to take advantage of such courses to reduce your learning period.