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In investing, when you see a very cheap stock, your first reaction should definitely not be to buy, but to think: why is this stock so cheap? Most of the time, cheap stocks have cheap reasons. Only when you understand why this stock is cheap, can you determine if this is a value trap. If it's not a value trap, then you can buy. At the same time, you also need to think about why this stock can be sold so cheaply? What are the motivations of the sell-side analysts and institutional investors hyping the stock? If you don't think clearly about these compared to those people, what competitive advantages you might have, it is best to buy ETFs for passive investment. Because this market may be too suitable for you.
Lastly, you need to understand what your DefaultStrategy is. Default Strategy refers to what you should do when you cannot find cheap stocks. If you are an individual investor, or manage family funds, the best choice when you cannot find bargains is to hold cash. However, if you are a fund manager, your best option may be to buy index funds. In any case, you must prepare your DefaultStrategy.
Lastly, you need to understand what your DefaultStrategy is. Default Strategy refers to what you should do when you cannot find cheap stocks. If you are an individual investor, or manage family funds, the best choice when you cannot find bargains is to hold cash. However, if you are a fund manager, your best option may be to buy index funds. In any case, you must prepare your DefaultStrategy.
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cosmiclatte89 : Good insights
agree with you!