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Their goals are driven by chance. Bad luck, he says, adding that “such paradoxes exist,” and alluding to other dangers. This brings to mind the billions injected by governments the world over to bail out the financial sector in the wake of the global liquidity crisis. And now, says Alumnia, markets shudder at the level of public debt.
Curiously, Goldman Sachs, investigated by the European Union (EU) for its role in the financial maneuvering that helped Greece use swaps, backed Alumnia at the start of May in offering credibility to the Spanish government’s plan of fiscal adjustment.
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Value investors look for cheap stocks that are trading at a discount to what they should be worth. In its purest sense this involves hunting for companies whose market capitalisation is less than their tangible net assets. The idea is to buy shares trading below their intrinsic value as this should ultimately result in a positive return.
Other ways of identifying value involve looking for shares with a high dividend yield or those with a low price to earnings ratio relative to the rest of the sector. This is the exact opposite to what a growth investor would do, as they are primarily interested in the potential of the company to increase its future earnings. These sorts of stocks are typically characterised by higher PE ratios and lower dividend yields.
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