Advice: Value vs Growth Investing???


I will seperate this post into 8 parts and hope you could answer one by one if possible.

  1. Is it normal for Growth stocks to be have a price much higher than its intrinsic value? Is this ok and sustainable? Take apple for example, is it a good growth stock at this time when its trading at more than double its intrinsic value? Or Microsoft that is trading at 3x its intrinsic value?

2.Also, for how long should you hold a growth stock for? Like, is their a target price or the idea behind this is just to grow indefinetly?

3.Should we cut your losses with growth stock or let them run at a big loss to see if they bounce back?

4.Do companies that are trading below intrinsic value for no serious reason always come back to their intrinsic value? With serious reasons I mean financial reasons and not optics like a scandal and such.

  1. Should we sell a value stock as soon as it reaches intrinsic value or is there another “value” that better represents the stocks potencial.

6.WIch one would be better? Is a combination of the 2 a good choice? Like 50% of money to Value and 50% to Growth? Can this ratio be adjusted in Bull vs Bear markets or is there no correlation between the type of market and the performance of this two strategies.

7.Are thes good growth picks? Nextera, Facebook, Microsoft, , Apple, AGNC?

  1. Are thes good value picks? Heidrick & Struggles, XPO Logistics, HP. Mesabi Trust, Omnicom Group?
  1. so intrinsic is based off your opinion. if you are a value investor, you only deal with companies that have stable earnings so when a growth company is being valued, it will typically be higher than your intrinsic value. imo apple is more of a value company. their growth has slowed in 2019. buffett’s berkshire owns about 5%, and he looks at it like a consumer staple.

  2. you hold a growth stock until people think that it will slow down. the minute a growth company has a hint of slowing down, people will punish it severely. apple was previously punished because it slowed down, it was trading at a multiple of 10x at 1 point.

3.imo if you believe in a growth company, then you should hold, because if your story is right then earnings should rise and force the company up. the minute you dont believe it anymore is when you should sell. it has to be a major change. a superior competitor, a new way of life that affects their product, etc.

  1. a company can be below intrinsic forever even as price rises. i think the key mistake most people make is they believe intrinsic value is a fixed price. it is not. earnings change. products change. a good company will have intrinsic value rise. i think the key trakcer for intrinsic value is book value as that is really net worth. but there are many ways to keep book value low, such as repurchasing shares, or paying out dividends. but if those were removed and adjusted for then book value owuld be like a score.

  2. you should sell if it there is better value elsewhere. but always adjust for your net proceeds after selling. imo better value is defined as a company with lower price to intrinsic value, a history of increasing intrinsic value, and stable earnings! the best companies are the ones where you dont sell and they just keep getting bigger over time.

  3. i buy value and growth. value is focusing on the balance sheet, like p/b, the amount of debt, what type of assets, how they are valued. growth is focusin on the earnings peg, historical earnings, id look at debt still since if earnings drop, debt will be a problem. in the last 100 years value has outperformed growth significantly, but in the msot recent 10 years ,growth has outperformed value. but imo, you should be doing both when analyzing a company.

  4. i own fb(growth) and apple(value). i think NEE, AGNC is more of a value co. JD and MSFT is growth. imo p/b is a good metric to see if it is value and growth. you can also look at the stability of its earnings to determine if it is value or growth. lstly a company can also have a low pe and people will call it value. NEE is a utility so that is just an overpriced value co. apple has stabilized earnings in the last 5 years so some may argue it is value now.

  5. these are all value in 1 way or another. i only like omc.

bravo. nerdy the serial compounder!

I always invest for growth. Some people on this board clued me in on VOO and I’ve had solid results trading it.