Stock Market Info :: Value Versus Growth Investing

Value Versus Growth Investing

So what is the difference between value versus growth investing? Here is the main difference between the two: growth investors often are very short term oriented, and will simply invest in a company if it’s expected to go up in the near future.

They aren’t worried in the latest about its long term profitably. A long term investor, on the other hand, is much more concerned with a companies’ future outlook and profitability potential than a quick gain.

A better term than growth investing would be technical investing. A technical investor virtually ignores a companies’ profitably and instead looks for signs in the charts of a company, such as when it goes up or down, what factors caused this, the general current trend, and what can be expected in the near future.

If these signs look promising, a growth investor will often jump in, make a quick profit, and turn around and sell.

Unfortunately, very often the opposite of what they are expecting occurs, and they end up losing money. In order to succeed with this method, you need to be extremely adapt at reading stock charts, and always on your toes about when to buy or sell.

A value investor, on the other hand, not very concerned about how well a company will be doing in the near future; they are focused on long term profitability.

In fact, a growth investor will often go 6 months to a year at a time without checking to see how their investment is doing.

The judge of how well their company is doing is the annual rate of return. This is a much safer, and usually long term profitable method.

The bottom line: yes, there are some investors who have made good money as a growth investor. However, nearly all of the world’s top investors are value investors, and with good reason.

It is much easier to predict how well a company will do in 5 years than it is to predict what their stock price will do within the next week. It’s also a less stressful method.

Therefore, being a value investor is highly recommended for long term profits. Yes, the short term gains often aren’t as high as a growth investor receives, but long term you will get very wealthy.

Hopefully these value versus growth investing tips will help you formulate the right strategy for you. Who knows-maybe you will be the next Warrant Buffet.