What is Growth Investing?


Last week we touched lightly on "value" investing. I hope that you got the general idea from the two examples. This week I thought that we could tackle, in the most simplistic manner, "growth" investing. On the surface, the names seem to imply that an investor would actually want both the "value" and "growth" characteristics when purchasing stock in any company. And then, to muddy the waters even more, you add these words, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price", by a man who has a little experience, Mr. Buffett. Anyway moving forward ...

Whereas, the "value" investor is looking for a company's stock to purchase at a deep discount to its actual operating and tangible value, the "growth" investor is searching for companies with very positive anticipated operating numbers or reasons for such. For example, if a company is introducing a new product like Netflix (NFLX) did with "streaming" in 2011, the future earnings of that company changes quit a bit. That's exactly why Netflix (NFLX) is considered a "growth" stock.

Both of these attempts to find companies with a unique (value or growth) stock price position that will perform have their challenges. To learn more about "value" investing check out (no pun intended) The Intelligent Investor by Benjamin Graham or Measure What Matters: The Simple Idea that Drives 10X Growth by John Doerr.


Success in all your efforts,


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John R. Kinkead

Vice President of Wealth Advisement