Growth investing

A strategy whereby an investor seeks out stocks with what they deem good growth potential. In most cases a growth stock is defined as a company whose earnings are expected to grow at an above-average rate than its industry or the overall market.

Investopedia Says:
Growth investors often call growth investing a capital growth strategy, since investors seek to maximize their capital gains.

Although it is often said that growth investing and value investing are diametrically opposed, a better way to view these two strategies is to consider a quote by Warren Buffett: "growth and value investing are joined at the hip".

Another very famous investor, Peter Lynch, pioneered a hybrid of growth and value investing with what is now commonly referred to as a GARP (growth at a reasonable price) strategy.

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Getting big quickly looks good, but companies can get into trouble when they do it too fast. Find out how to spot this trouble. Is Growth Always A Good Thing?
Read about the achievements of those who have mastered the art of investing. The Greatest Investors
There are many ways to make money, knowing how to choose the best stocks is one of them. Guide to Stock-Picking Strategies

This article includes a list of references, related reading or external links, but its sources remain unclear because it lacks inline citations. Please improve this article by introducing more precise citations where appropriate. (April 2009)

Growth investing is a style of investment strategy. 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-earning or price-to-book ratios. 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. In addition, when just investing in one style of stocks, diversification could be negatively impacted.

Contents 1 Growth at Reasonable Price 2 Growth Investment Vehicles 3 See also 4 References 5 External links

Growth at Reasonable Price

After the busting 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
• Second-hand life policies

See also

• Value investing
• Quality investing
• Philip Arthur Fisher and Kenneth L. Fisher
• David Dodd
• Warren Buffett
• Growth stock
• Magic Formula Investing

References

External links

• fool.com: Value, Growth, and Buffett
• Morningstar style box

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