Put it this way, long term investing needs two ingredients. 1. Compounding 2. Cheapness.
By right yes, it is ok to buy great companies at a fair price, but you have to define what is 'fair'. If you look at nifty-fifty stocks where everyone go crazy for companies like Xerox, GE etc back in the 70s, they are quality, but if you bought at those price it will take you 20-30 years to recoup your investment and make a decent return. Decent return i mean return similar to broad index.
And another thing about quality stocks such as digi, GAB, Nestle, Dlady. They are considered quality because of their strong track record, therefore they are considered 'large cap' stocks in Malaysia. Their ability to grow in the future is likely to be slow, perhaps close to Malaysia GDP growth rate, unless they have overseas operation. In that sense, if you buy quality companies at a 'fair' price, you need to make sure it is 'fair' and need to make sure the company will continue to do well 10-15 years from now. Any misstep it is very likely you are going to lag behind broad index return.
Conclusion is, what is your desired return? If you are asking for 10%, which is the CAGR return for KLCI for past 30 years, it makes no sense to invest in quality stocks. If you are asking for 15-20%, you have to make sure those quality stocks can deliver that return to you in the long run.
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Posted by JN88 > 2015-08-01 08:32 | Report Abuse
Macam ini baru investment ma.....Hari ini beli besok mau untung ka..haha