Growth investing
Growth investing is a style of investment strategy focused on capital appreciation.[1] Those who follow this style, known as growth investors, invest in companies that exhibit signs of above-average growth, even if the share price appears expensive in terms of metrics such as price-to-earnings or price-to-book ratios.[2][3] In typical usage, the term "growth investing" contrasts with the strategy known as value investing.
However, some notable investors such as Warren Buffett have stated that there is no theoretical difference between the concepts of value and growth ("Growth and Value Investing are joined at the hip"), in consideration of the concept of an asset's intrinsic value.[4]
Thomas Rowe Price, Jr. has been called "the father of growth investing".[5]
Growth at reasonable price
Growth At A Reasonable Price is a strategy that blends aspects of growth and value investing. Investors seeking growth at a reasonable price look for stocks that they believe will deliver above-average growth, but that are not too expensive.[6]
After the bursting of the dotcom bubble, "growth at any price" has fallen from favour. Attaching a high price to a security in the hope of high growth may be risky, since if the growth rate fails to live up to expectations, the price of the security can plummet. It is often more fashionable now to seek out stocks with high growth rates that are trading at reasonable valuations.
Growth investment vehicles
There are many ways to execute a growth investment strategy. Some of these include:
- Emerging markets
- Recovery shares
- Blue chips
- Internet and technology stock
- Smaller companies
- Special situations
See also
- Value investing
- Quality investing
- Philip Arthur Fisher and Kenneth L. Fisher
- David Dodd
- Warren Buffett
- Growth stock
- Growth Investment Managers
- Magic Formula Investing
References
- ↑ "What's the difference between growth investing and value investing?". us.axa.com. AXA Advisors. Retrieved 5 January 2015.
- ↑ Lutts, Timothy. "Growth Stocks". Cabot.net. Cabot Investing Advice. Retrieved 5 January 2015.
- ↑ "Growth vs Value Investing". fidelity.com. Fidelity Investments. Retrieved 5 January 2015.
- ↑ "Growth Investing". Investopedia.com. Retrieved 5 January 2015.
- ↑ Investopedia. The Greatest Investors: Thomas Rowe Price, Jr.
- ↑ "Growth At A Reasonable Price". Investopedia.com. Investopedia. Retrieved 5 January 2015.