What type of stocks would you consider as Core, Growth, Speculative? - Seedly
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Adam

Asked 4w ago

What type of stocks would you consider as Core, Growth, Speculative?

David Kuo's always talks about this strategy for his portfolio, i would just like to know how would you classify your stocks in these categories?

Core - Dividend based, high free cash flow

Growth - ?

Speculative - chasing the next big thing?

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Hi there,

I catergorise my stocks into Secular Growth, Defensive, cyclicals, and the in betweens for e.g. moderately cyclical- moderately growth.

I feel this way of catergorisation helps to me to understand the business better.

Terms such as Growth or value doesn't tell me much about how the underlying business runs for e.g. Microsoft was not doing as well for a few years. They were considered a value stock and suddenly some investors now consider they are a growth stock again because their growth rate is higher.

Instead catergorising them into a way that helps me understand the underlying business, helps me make decisions better.

There are certainly more differences between the cetergories, but I do not want to list an endless list, let me know if you want more information on any particular aspect.

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Yeo Shin Loong
Yeo Shin Loong

2w ago

How does categorising it in this way help you in making your investment choices?
Jovan Lai
Jovan Lai

2w ago

Great Question! It helps me to know what to buy first and what to expect. For example, I expected the secular growth stocks to recover faster and extend much more because of higher growth rates, higher valuation and also hype/popularity. Do note they tend to take high portfolio allocation in ETFs, Index/mutual funds as well so there's constant inflow of cash to raise stock prices by passive investors. Hence, they make majority of my portfolio as I'm looking to invest for the long run. However, I only like to buy individual stocks when they are undervalued. Many tech stocks are well loved and easily over valued. I do not want to add on after they have already gone up. But, I want to remain invested and don't want to pile up cash and wait for the next significant correction because we can never know when that happens. The crash this year was a good example. I focused on secular growth/tech stocks earlier on. Only in recent weeks/months I added to defensive and cyclical stocks which were more under/fair valued. September sell off hurt tech/secular growth stocks most but the some stocks in other categories performed well. This categorisation helps me in my strategy to prioritise what stocks to add in my portfolio at the price level and period of time because it tells me more about the underlying business. This helps my portfolio a lot as compared to if I went into the defensive and cyclical stocks first and only enter into secular growth/tech now. Also, I expect cyclical stocks to recover slower and hence, I tend to sell them off when I feel that the market is very over extended in the short run for e.g. last week of august I got rid of some stocks as bullish sentiment was rising too quickly after we passed the Feb All time highs and I expected a correction. Before buying them lower after the correction. I understand that not everyone will take an active approach like I do and that's fine. You should follow what you believe in and have affinity to.
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I classify my stocks into catergories as such:

  1. Value

  2. Growth

  3. Recovery

  4. Dividend

  5. Speculation/Trading

For each catergories I would place 2 examples but please exercise due diligence should you be interested to invest into them.

  1. Value: Berkshire Hathaway, Coca Cola

  2. Growth: Salesforce.com, Alibaba

  3. Recovery: SATS, Banks

  4. Dividend: REITs, Banks

  5. Speculation/Trading: Slack Technologies, Fastly

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Hello,

Core - Companies im most confident of with good dividend and moat

Growth - Companies i expects to see it grow, be it share price or dividend, but slightly riskier

Speculative - Those i see in forums LOL but definitely will weigh pros and cons (rarely i buy this unless good potential)

I would add undervalued as a category because if a company is undervalued at current price, it can be seen as a growth (in terms of share price), core (in terms of fundamental) and speculative (potential to rise back).

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