leanne. You are right about your views on growth. Most of this growth mania has been caused by institutions that trade in and out of blue chip stock for captial gain.
Institutions have more power and money than ever before. Superfunds and other capital gives them muscle. This often gives them a lot of power on company boards and the ability to put pressure on companies to engage on high risk behaviour.
Maquarie bank, known for its high ego and creating million aires was a big offender last crash. They saw themselves competing with Babcock and brown so they overpaid for large assets that became negitively geared. The difference was Babcock went bankrupt.
It would be far better to have better returns of 10% and less captial gains. Instead we have capital gains of 30% with pe ratios of 20 and return of 4%.
High capital gains and low returns creates a boom bust market. The market forces associated with a capital loss linked with a correction generally results in a larger loss than reduction in dividends.
Growth stocks have a higher pe ratio but suffer a larger loss in a correction. What Im trying to say is manny bluechip companies are being traded like commodity companies. This is probably caused by greed, manipulation, and institutional risk taking.
