Investing has different styles-
- Value Investing
- Growth Investing
Meaning of Value Investing– Value Investing refers to identifying the companies that are “Undervalued”, but has the potential to grow in the future.
Generally value investing stocks are cheaper as they are undervalued. The investor has to estimate the future growth in the company and take decision whether to invest in it or not!
Meaning of Growth Investing– Investing in growth stocks are easier than identifying a value stock. Because Growth stocks are already available at “Fair” Prices having past record. The investor has to judge the fair price to invest and take decision to buy on his wished price.
Which is Better- Growth or Value?
Growth stocks can be easily identified and can be placed at market price. The investor has to check the entry points and decide on the exit price up on market movements
Value stocks requires expertise and patience. If the investor wishes to hold for the long term, value stocks are good bet. But identifying a value stock is a difficult task as they are undervalued when compared to market movement. The investor has to estimate the future potential in the long run.
Legendary investor Warren Buffet follows- Value Investing. He has the capability to identify the undervalued stock and take risky bet. But this is not possible for each and every investor. As Warren Buffet’s portfolio is large, he can bear the risk associated with value investing. But a small investor can’t take such risk.
So, if you have expertise and are confident on the future potential of the stock, opt for “Value Investing” or else opt for “Growth Investing” as it would be easy to estimate the fair price!