Two major pools of traditional investment strategies are value investing and growth investing. Each style has its ideal market conditions for thriving. With the guidance of experienced financial advisors, individual investors can select a strategy that best fits their risk level and needs.
Value Investing
Value stocks are those that analysts conclude are trading at an undervalued price and should appreciate to match their fair values. They tend to have relatively low P/E ratios, low volatility, and high dividend yields. Value stocks tend to outperform the market in periods of high inflation and bear markets. This is Warren Buffett’s strategy.
Growth Investing
Growth stocks are those that investors believe have high earnings potential, driving future growth. Opposite of value stocks, their P/E ratios tend to be high, volatility high, and dividend yields low. When inflation is low in a bull market, growth stocks tend to outperform.
Blended Strategy
Utilizing a blended strategy is also common because, in reality, “growth” and “value” are muddled. Most individual stocks are neither 100% value nor 100% growth. The S&P 500, a fund of 500 large stocks, is roughly half value and half growth. A financial advisor can guide the individual to determine an ideal strategy based on risk tolerance and time horizon. All stocks should be selected with utmost discretion.
Getting Started
First State’s Gold Chip philosophy involves extensive research on a selected list of well-established value and growth stocks. Our Tulsa financial advisors customize all portfolios to clients’ individual goals and risk tolerance. For a free consultation, contact us today at 918-492-1361.
This overview is for informational purposes only and is not a recommendation. It should not be the sole deciding factor in making an investment. Investing is a risk and, as with all risks, a positive return is not guaranteed. Past performance does not indicate future results.