Can a growth stock also be a value stock?
Wednesday, 7. April 2010
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I’m basically a technical/momentum trader and ignore most everything else, but I’ve started doing some research on other ways to evaluate stocks for trading. Do you have simple ways to identify each (PE ratio, PEG, earnings growth, etc.)
muncie birder, Not sure what to read into your answer. Are you saying don’t bother with either or that they are basically the same? The rate of return on both funds is unimpressive at best. To be more specific, I am not an investor – I am a professional trader and I am just looking for some additional edge when selecting my trading candidates. I wanted to see if there’s anything that I’ve been missing by ignoring these two concepts. I can’t determine the difference, really. Maybe that’s your point. Thanks for your answer.
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OPM Says:
The confusion is created by Morningstar’s division of the world into growth OR value. This is silly and goes against the definitions.
A value investor buys stocks below their prospective intrinsic value, based upon accounting valuations.
A growth stock is a stock whose growth in earnings is expected to exceed the market as a whole.
Growth stocks can and often are value stocks.
I play a stock game and you can find a simple outline of how I manage the portfolio. It of course mimics my real managed portfolio. I use value investing but I often combine other strategies with it, including growth, but I do not require growth. I am willing to make excess money in anything including bonds and real estate.
The yellow line is my portfolio, the blue line is the average of the top 100 investors of the 70,000 participants.
As a trader, you could make a killing combining the stategies by limiting your trading to value stocks or value stocks that are also growth stocks.
The portfolio is at http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=CaHiHdImDlIfEbAoMaKiAbOa
SWH Says:
Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, causing stock price movements that do not correspond with the company’s long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated.
Typically, value investors select stocks with lower-than-average price-to-book or price-to-earnings ratios and/or high dividend yields.
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. ". Low PEGs are a good indicator of a growth stock.
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.
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slavaret2 Says:
Technical/momentum trading is mostly about market psychology – not academic valuation. Earnings growth provides the best price support for intermediate term moves.
muncie birder Says:
I just love those two terms. Value stocks, growth stocks. Take a look at these and tell me which is the value index fund and which is the growth index fund.
a. 5 yr return 12.4% 1 yr return 25%
b. 5 yr return 7.4% 1yr return 20.4%
The answer is given in the links below.
sam k Says:
any details about stock market,
i hope this will helps u…
http://www.investyourmoney.110mb.com
minsheng y Says:
Hi, i recommand you a good and basic tutorial for investing. it covers all Issues related to your Investing and everything around it.
http://www.tutorialforyou.net/investing/
wish it will help you.
Good Luck , Best Wishes!
natsyelah Says:
not usually