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Topic : Personal Finance
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Created by : Padmanabhan R, Articled / Audit assistant, Finance student  | 08 19 2009 10:31:21 +0000
Industry : Asset ManagementFunctional Area : Valuation(Corporate Finance)
Activity:  534 views;  last activity : 07 06 2010 20:18:09 +0000

Equity investing styles can be classified into value investing and growth investing.

Each have it’s own advantages and disadvantages. Though value style have more potential, there are times when growth style outperforms value style.

 What are the features and advantages of one over the other? Also please contribute your views on style switching and style tilting.

 
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Value Style Vs Growth Style
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Top Argument
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Value investors invest in stocks that are undervalued and follow the bottom up investing style. They invest in those having relatively low price to book value ratio  and are relatively cheap when compared to growth stocks


By Padmanabhan R, Articled / Audit assistant, Finance student  08 19 2009 10:31:21 +0000
 
Top Argument
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Mutual Funds have posted a growth of over 30% this year (09 - 10).

Growth style investments are what I understand and what I like :)) Its a very valuable knowledge based debate Padmanabhan. I think you need to refer it to more professionals. Let me see if i can do it.

:)


By Makrand Bhave, Marketing & MICE, WIZCRAFT International  01 18 2010 06:26:41 +0000
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I feel both value and growth have their own values and risk involved. However, most of the reasons are mentioned by our other friends but i feel if one can calculate and find the right value stock then there is nothing better than that. Value stocks returns are quicker and better when the right stock has been identified by the investor. I could conclude saying " all the value stocks are growth stocks(faster growth) but all the growth stocks are not value stocks "  .... Thank you, Manish N

Cheers!!


By Manish N Chugh, Officer Trainee, Stock Holding Corporation of India ltd.,  | 01 19 2010 14:46:39 +0000
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If you look closely, Value Style could be a strategy adopted comparatively for a long run (as you see that currently the stock is undervalued and could benefit when industry picks up or positive correction occurs). Whereas, Growth strategy is adopted looking at current success and immediate return.

Considering this, a right investing style can be determined.I see a little risk in Growth lesser risk in Value.


By Nishchal Khetarpal, Client Servicing/Key Account Manager, HCL America Inc  | 01 18 2010 05:22:10 +0000
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The value/growth blend approach to investing requires the use of the valuation metrics described previously as well as a utilizing certain growth criteria. While most of the valuation metrics utilize hard facts, the growth aspect is much more difficult to understand. No one knows what will happen in the future. If someone says they do, run for the hills. If an investor views the world economy as a whole, though, he or she can get a pretty good sense of macro-economic trends likely to be significant in the next few years. This is not an exact science, and requires much research and a vast amount of economic knowledge. When performing this test, it becomes apparent that there are several industries that will most likely see prolonged growth in the next decade.


By Esha Johar, Risk Analyst, Irevna  | 08 25 2009 11:49:32 +0000
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Value investing is investing in liquid stocks where the stocks have their intrinsic value due to their potential. These may be characterized by higher percentage holdings by promoters like any multinational companies, high product flexibilities like oil & gas, high dividend pay outs like PSUs, high liquidity and growth like infrastructure stocks. Many people also consider investing in selected stocks in those sectors which are compulsory for any nation's growth like Cement, FMCG, Steel, Power etc. where during any policy changes, government takes care of these sectors for growth.


By taranath joshi, DGM Operations, EOL,  | 08 19 2009 14:39:19 +0000
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Growth investors attempt to purchase stocks that have high expected future growth rates.  Some growth investors are more disciplined with regard to the price they are willing to pay for future growth.  They seek growth at a reasonable price (GARP).  While their emphasis may be different, GARP investors are essentially equivalent to value investors who seek future earnings growth.

Thanks for the referral Makrand.


By Shiuli Mukherji, Head Strategy Plan- , Region SEA  | 01 21 2010 08:40:10 +0000
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Growth style is the common option available...it gives a better output...if we know the market situation..As Makarand said..we need to involve more professional of this field to get better output of this debate.

Good debate start Padmanabhan...appreciated.


By Nitin M Aras, Head/VP/GM-Tech. Support, ODTIN Food Solutions Pvt Ltd  | 01 18 2010 07:42:45 +0000
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I think in value investing style people expect moderate return and stock too is less volatile as compare to growth stock. These kinds of stocks normally provide regular dividend so that your risk gets minimized. These stocks are not directly proportional to index. 

On the other hand growth stocks are highly ambitious stock and project excess volatility. These kinds of stock have great say on indexes. They are directly proportional to index. If index goes down substantially then stock will also goes down substantially. Normally these kinds of stock have high weight age on index. These companies reinvest their money in business rather than providing dividend to shareholder.

 


By Deepak Agrawal, Consultant, Independent Consultant  | 09 13 2009 05:38:22 +0000
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I support the growth style in the indian scenario. The undervalued assets are perceived lower by market not without reason. The reason in most cases is the risk element added by closely held promoter families. In the climate of wheeling and dealing that goes on in indian market, and in view of the relative inefficiency, unless you invest sizeably, the value investing style is a real non starter.

For a retail investor this may end up being walking a dark alley in the dead of night, blind folded.

 


By siva raman, Snr Finance Manager, Energy City Qatar  | 08 24 2009 18:12:33 +0000
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This is a type of option available in Mutual fund.


By taranath joshi, DGM Operations, EOL,  | 08 19 2009 14:41:18 +0000
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Growth investors invest in stocks that have high future growth potential. They usually invest in companies who reinvest their earnings currently  and are expected to give higher future earnings.


By Padmanabhan R, Articled / Audit assistant, Finance student  | 08 19 2009 10:38:28 +0000
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