I am failing to see the big deal about value and growth, I am not in asset management, so what do i know…
But I am thinking, should not you value a stock according to your model, or even better according to the model you think the market is using, however you use superior inputs and work hard to get additional information…
if it comes out to be undervalued you buy it and hopefully the market will soon see what you saw before and the stock price will go up…
what is the deal with saying i wana buy a stock cause it has high growth, or cause it has a low p/e
it can have a high growth, but be over valued, and it can have a low p/e but be overvalued cause earning are gona go down
Due to lack of knowledge in the feild, I am against both, if I had money I would invest in whatever I think is going to go up, if it has low growth but i expect its price to go up due to an unreleased product i would but it, if it has high p/e and i see something brilliant going in the company, i would buy it…
So yeh nothing aginst value or growth people, you know better, catch me up…
If the fundamentals indicate a company is growth- you invest if you dont mind having your money locked up for a few years and think the high return will be worth it.
If the fundamentals indicate that a company is value- you invest coz dividends will provide a steady income and return on investment will be moderate.
Out of the possible investments , which one would you choose ? Is that based just on a gut feeling or some reasoning? If you are following a style , value or growth , it is one approach to the reasoning process . There are others too .
If everyone followed the same process it would make for a very undiversified world and possibly increase risks for everyone . Just look at the AAPL bubble developing now . I wonder when and how it will pop
i know there is difference bettwen growth stock and growth company, it seemed to me that in holding bases analysis they were talking about growth stocks … they never seemed to clarify that
We never buy companies , we only buy stocks . We’re not Buffet who buys companies.
It is only in a behavioral question that this could come up. There you have to show that a company that has been “growing” in the past ( hence a growth company) may not be expected to grow in terms of its stock in the future .
Simply based on the past you could categorize companies into growth or not but rational analysis should be used for stock selection