Is it better to be a value investor or a growth investor?

Hello everyone. I'm just starting investing in stocks and wanted to see if anyone could give me some advice. There is just so much information out there that it's really hard to take in everything. I read in some books that the best way to invest is to find undervalued companies that have good fundamentals and will eventually come back to it's true value; meaning you will eventually make a big return once it gets back to it's true price(Value Investing). I also hear on the other hand that the best way to invest is to get in on companies with great upside like Google, Baidu, Blackstone, etc.(Growth investing). The problem with that is...I'm scared that once I do get in, that I will have got in too late. For all you investors out there that have been doing it for awhile, what do you suggest? I know Warren Buffett and Phil Town are all about the Value Investing so I can't go wrong with that philosophy. However, I know that there are others that are big on upside. Help!!! Thanks

As they say on Wall St., bulls make money, bears make money, pigs get slaughtered.

There is more than one way to make $$. You need to select a system that matches your personality and stick with it to become good at it.

Value investing is favored by brokers, institutions, and amateurs. You buy close to the bottom (the key is to learn to tell a bottom from a bottomless pit) and wait. The upside - value stocks are so beaten down they hold up well in a lousy market. The downside - you may wait a long time for the market to recognize the hidden value you have supposedly uncovered.

Growth investing is favored by more active investors, traders, etc. Stocks move up in a succession of bases and runups - growth investors buy runups. You have to be fast on your feet as you don't have forever to make up your mind. The upside - you make money fast if you buy right. The downside - stocks that run up fast come down even faster, so it's easy to get bruised if you don't know what you are doing.

Example: AUO. A value investor will buy in the $13-14 area, sell in the $17-18 area; a growth investor will wait until the stock takes out $18 before buying.

Investments are cyclical.. at times value investing out performs growth investments and at other times its the other way around.. hence, having a diversified portfolio will cover all your angles.. Utilizing mutual funds makes it easier to put your eggs in different baskets and diversify your portfolio (not only among value and growth investments but) among different equities in each class as well.. Plus you get professional management, record keeping and ease of making small investments (dollar cost averaging). Yes you may have to pay a nominal fee (shop around for lower expenses) but its worth it.. Good luck

"Value and growth are connected at the hip." -W.B.


"This is one of the most dangerous arguments to enter. It can be discussed back and forth by the proponents of both the philosophies that their own approach is superior to others. There have been periods where Value investing has paid better dividends and like wise there have been periods where growth investors have outperformed. The reasons could be well explained by its various advocates. Generally, it has been noticed that "cheap" companies outperform in weak market periods because the "margin of safety" was already built into the stock. On the other hand, in bullish markets, growth stocks come under high focus since their "virtues" (high earnings, strong management etc) are highlighted at this time. " ---http://www.valuenotes.com

You don't have to be one or the other. You can be both, even in the same stocks. Look for stocks with good fundamentals -- stocks that have earnings, pay dividends, and don't have outragous valuations -- but also have been growing their profits and stock price.

They are both oriented towards GROWTH. Warren Buffet didn't become a multibillionaire buy buying stocks that had declined in value and bounced back to their one time highs...

You are slightly misinformed about his trading strategy. He buys company's that are trading at less than what they
SHOULD be trading at, based on their fundamentals!!!!

If a company's stock declines in value, there is no guaratee its going to go back up.

However, if you find a stock that is trading at far less than it should be, there is every indication to expect that the stock will rise in value over the LONG term.!!!! That is what makes Warren buffet a genius.

If you are a novice investor the first thing you need to do is conduct a self assessment to determine among other things, what level of risk you are comfortable with. The market can be very volatile at times and unless you are comfortable with your investment strategies (both value and growth investing have pros and cons - there is no "best" method) and have confidence in your convictions you will likely be swayed by public opinion and so called "expert analysts". It is also essential to have a written plan which outlines your present financial status, your goals and expectations for the future (short and long term) as well as those commitments you have, or intend, to make. It is easy to be overwhelmed by the information overload you have referred to, so take things slow and dont place too much on your plate in the beginning. You will make mistakes as all novices do but dont get discouraged. It is not a bad idea to join investment groups on the internet where you can not only gain from the experience of others but form some good friendships as well. Best of luck.

thats a dilemma most of us face. My take is that use Value ones for longer term investments and (if at all if) use growth ones for short term trades.

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