Best Practice for Creating a Portfolio of Stocks

In general portfolio managers have tendencies toward one of the following stock classes for investment.

  1. Value stocks: These are the stocks with high dividend yield and a proven business model which has been working well for many years. The portfolio manager tries to find a low P/E ratio to enter the investment in these stocks. The most famous investors of this class are Warren Buffett, Charlie Munger, and Bill Ackman. They always look for blue-chip, well-established businesses, when they have a low P/E ratio compared to their average. They buy at…