Garbage stock investment

The garbage stock investment, dare in a way to invest only in stocks that stock prices are extremely sluggish, American investors = John Templeton is now famous for the practice.

One of the winning strategy of the equity investment has a concept of "contrarian". Stocks which had been stagnant in the last, in subsequent periods tend to record a higher performance than the market average, is also referred to as the return reversal. Say also the ultimate system of the contrarian investment, it is garbage stock investment.

Templeton young "low strains have been abandoned from the market, if performance is restored at once attention would gather as Cinderella" thought and, if the stock price has been stagnant extremely that less than 1 torr to exit to the outrage that all buy in (a total of 104 stocks). Investment in this garbage stock that was also amazed from the securities company, was now able to get to the benefit of also about 4 times when we have sold an all strains after 4 years.

Companies that stock prices are sluggish, so that it have a big problem for most, ordinary investors will hesitate to buy. Because most of the investors to shy away from, stock prices will slump to levels significantly below the original value companies.

However, if you can solve the problem companies, stock prices will rise up at once appropriate level. Rise in the share price of the company that became a decent state from bad state, than in the case of excellent companies originally further extend the performance, you can record a much higher yields.

Or have first place oligopolistic market of that excellent companies, because the rationalization of management is progressing, raise a more excellent performance is a daunting task. However, the bad company is restored to decent management, (and only do the things that are made by other companies) does not have too difficult. The first place, then you strive to raise the always sales of that company, because you have a particularly bad companies as sense of crisis, it is a translation rise bias is greater than the outstanding companies.

Yield of low PER stocks and low PBR stocks in today is, in the long term will not appear also statistical results that exceed the market average (so-called value investing). PER and PBR are low value stocks also, in terms of brand is not low evaluation only be obtained from the market is re-evaluated as Cinderella, this is the same principle as the return of garbage stock investment is higher.

By the way, John Templeton, in the wake of the success of this garbage stock investment, has climbed to one of the leading fund managers in the United States. However, subsequent Templeton shifts the stance to growth (growth stocks) investment such as to invest in Japanese stocks, does not mean continued to earn in garbage stock investment