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The investment strategy of the leaders in the industry - Citi
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Loading...Investing in the stock market may be easier than we think, according to Chris Montagu and the equities research team at Citi.
They have identified that the strategy of investing in so-called high-quality stocks has returned 5% to 7% a year on average since 1995.
All you have to do is pick out big, boring stocks with decent profit margins, low debt, and reliable income flows.
Then sit back and wait.
Citi tracked high-quality stocks like France's L'Oréal, Sweden's H&M, and Admiral Group in the UK and found the strategy worked.
So about £100 ($155) of quality stock in 1995 is worth more than £400 ($620) now, despite all the crises between now and then.
It was less risky than trying to pick out more volatile stocks that had room to grow and benefited from economic uncertainty all over the world.
Easy, right?
Well, not quite. The Citi analysts hedged their bets by saying a hike in interest rates may blow this strategy out of the water — presumably along with all other types of stock-market investment.
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