dimpy.handa
Dimpy Handa
Distressed debt holdings gained 39.5% year-to-date. (Just think of the returns if you leveraged your holdings!)
Graham recognized that it is difficult to predict which individual holding would be the one to fail, which is why he stressed the importance of a diversified portfolio of distressed securities as a hedge against a few of them going belly up. Graham also pointed out that with a diversified portfolio of even the most bargain basement stocks and bonds, the odds are in your favor because most businesses do not end up in failure, but either are liquidated, acquired, or recover before it fails.
Value investing usually, (not always), outperforms growth, but it is not for the timid. No matter how low a stock or bond is, it can almost always go lower, and value investing almost always involves investing in distressed companies. Those who need more predictability are probably better suited to growth investing. But for those who have the stomach for it, value investing can be very rewarding.
Graham recognized that it is difficult to predict which individual holding would be the one to fail, which is why he stressed the importance of a diversified portfolio of distressed securities as a hedge against a few of them going belly up. Graham also pointed out that with a diversified portfolio of even the most bargain basement stocks and bonds, the odds are in your favor because most businesses do not end up in failure, but either are liquidated, acquired, or recover before it fails.
Value investing usually, (not always), outperforms growth, but it is not for the timid. No matter how low a stock or bond is, it can almost always go lower, and value investing almost always involves investing in distressed companies. Those who need more predictability are probably better suited to growth investing. But for those who have the stomach for it, value investing can be very rewarding.