Friday, February 22, 2008

David or Goliath?

Despite the emotional drift, it’s a hard choice out there
“To achieve ‘satisfactory’ investment results is easier than most people realize; to achieve ‘superior’ results, harder than it looks,” noted economist Benjamin Graham – also hailed as the father of value investing – couldn’t have been more bang on right when he authored this magnanimously quoted statement. But before appreciating this statement, you have to decide whether you wish to be on that part of the barn that is ‘satisfactorily’ green, or the part that is ‘enviously’ and supremely greener! Surprisingly, many retail investors would prefer the ‘satisfactorily’ green side, given the lesser associated risk return ratio. And this ‘satisfactory’ side in the stock markets is surely the small and mid-cap stocks segment that has performed relatively better and stabler in a market whenever there were depressingly negative returns. So, why have the large-cap stocks moved en masse, whether up or down?

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