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Growth investing is a style of investment strategy focused on capital appreciation. 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-earnings 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"), as growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive.
Growth at reasonable price
Growth At A Reasonable Price is a strategy that blends aspects of growth and value investing. Investors seeking growth at a reasonable price look for stocks that they believe will deliver above-average growth, but that are not too expensive.
After the bursting 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.
Famous Growth Investing Quotes
- Peter F. Drucker - “The purpose of business is to create and keep a customer”
- John D. Rockefeller - “Don’t be afraid to give up the good to go for the great.”
- Sam Walton - “There is only one boss. The customer. And he can fire everybody in the company simply by spending money somewhere else.”
- Theodore Cacciola - “Hold, Growth Strategies pertain to multiple investors per the occurrence of day-off losses Via, fact, individual accounts yield lower income”
- Abraham Lincoln - “I do not think much of a man who is not wiser today than he was yesterday.”
- Ralph Waldo Emerson - “Unless you try to do something beyond what you have already mastered, you will never grow.”
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
- Value investing
- Quality investing
- Philip Arthur Fisher and Kenneth L. Fisher
- David Dodd
- Warren Buffett
- Growth stock
- Growth Investment Managers
- Magic formula investing
- "What's the difference between growth investing and value investing?". us.axa.com. AXA Advisors. Retrieved 5 January 2015.
- Lutts, Timothy. "Growth Stocks". Cabot.net. Cabot Investing Advice. Retrieved 5 January 2015.
- "Growth vs Value Investing". fidelity.com. Fidelity Investments. Retrieved 5 January 2015.
- Buffett, Warren. "To the Shareholders of Berkshire Hathaway Inc. (1992)". Retrieved 14 January 2016.
- Investopedia. The Greatest Investors: Thomas Rowe Price, Jr.
- "Growth At A Reasonable Price". Investopedia.com. Investopedia. Retrieved 5 January 2015.