Summary
Obviously, if you buy a stock that is overpriced in the first place, one that trades at earnings multiples that are way beyond reason and it blows up, you're going to lose a lot of money. On the other hand, if you buy a stock trading well below its intrinsic value with low earnings multiples, what's the worst that can happen? It may not earn a great deal or show huge growth, but it isn't likely to incur a big loss, either.
One of the more notable funds employing this contrarian philosophy is the Dynamic Value Fund of Canada, which was voted last year's Canadian equity fund of the year by its industry peers. The fund has had returns in excess of 20 per cent per year in each of the last four years, soundly trumping the S&P/TSX index, and a five-year average compound annual return of 18 per cent. Compare that to the S&P/TSX, which has returned just 14.1 per cent over the same period. In fact, this fund has consistently beaten the index (with less price volatility) for the last 15 years.See the full content of this document
Extract
Market Correction Is the Ideal Time to Buy Stocks
Randy Reynolds - On Mutual Funds
WHAT'S the best time to buy tuna? When it's on sale, of course. So obviously that would be the best time to buy stocks too, right? Well, you woul...See the full content of this document
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