Friday, October 22, 2010

Value stocks re-rating

It's nice to see so many value stocks are being re-rate now. It's also imply that rational investors find that many stocks are stretching the limit, based on a number of valuation metrics.

One of the biggest mistakes of retail investors is selling out too fast because they have been sitting on losses or non-performing for too long. If we have some value stocks in our portfolio, we should hang on to the ride for a while -- either to maximize gains or minimize losses.

But we also need to pay attention not letting too much greed getting in our way because a big move in value stocks tends to attract momentum players. At some point of time, this group of players will know how to cash out based on their technical assessments. A savvy value investor will need to know when to cash out. I missed twice 25% cash out opportunities on my MUI since 2008. I am going learn to be smarter this time round. Have a nice weekend.

No comments: