Blue Chip vs. the Rest

[mime]

Anyone like to discuss the pros and cons of blue chips and the smaller stocks?

I know smaller stocks can fail more easily where as blue chips are more stable. But the rewards for picking a sucessful smaller stock can be much higher.

 

[Garpal Gumnut]

Anyone like to discuss the pros and cons of blue chips and the smaller stocks?

I know smaller stocks can fail more easily where as blue chips are more stable. But the rewards for picking a sucessful smaller stock can be much higher.

That is a very good question, mime, and I'm sorry the forum and I took so long to reply to your question.

There is a higher attrition rate amongst smaller stocks, speccies are often poorly governed and focussed on one event to be successful.

They can be thinly traded and thus price fluctuations either up or down can be at variance with their underlying value.

I am sure other posters will add and expand to this.

gg

 

[Knobby22]

7 years late after 3500 views!

 

[So_Cynical]

I think the prospectors need to be looked at differently, separately to the other small and micro caps, i doubt the failure rate of the non prospectors is as high...and because the micro caps are dominated by explorers they bring down the whole group.

The best 3 dividend yielding (over 12% ROC) stocks i hold have market caps of less than 80 mill.

 

[TMC93]

When i first started investing i would hear about the stocks that went up ten-fold in 12 months, but when you look at how many stocks are out there, it isn't easy to pick them (well for me it isn't . For me being young and plenty of ups and downs ahead of me, my ratio is about 50:50 for blue chips/small caps. I only have 4 stocks at the moment, one defensive that pays good dividends and has a positive price outlook, one has been hit hard that has a great growth outlook for 2012, the third is a small stock that imo is considerably undervalued, the fourth is more or less an exploration gamble.

Its up to you how you want to balance your portfolio, just remember that blue chips aren't immune to market turmoil (jb hifi recently). As always DYOR but thats how i like to view it anyway.