Cheap and cheerful or reassuringly expensive?

Many investors aim to pick up “cheap” shares. But cheap does not always mean good value, says Max King. Quality comes at a price.

Pile of pennies on newspaper stock price page 
(Image credit: © Alamy )

In the 1980s, Stella Artois started an advertising campaign based on their beer being “reassuringly expensive.” The idea that you usually get what you pay for applies equally well to investment as to beer or anything else. Quality always comes at a price.

The opposing concept is “cheap and cheerful” but in investment, “cheap” is not synonymous with “good value” and bargains are often not as good as they seem. With investments, “cheap” often means that there is something wrong that is not apparent at first sight. Fools rush into cheap shares while the wise are on their guard.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.