Investing in these times of economic and social uncertainty takes some extra care and skill. With the proper investment strategy you can weather the storm and come out on the other side better than when it started.

1. The Basics of Growth Stock Investment Strategies
For decades, growth investing has been held as the yin to value investing’s
yang. While growth investing is, in the most basic terms, the so-called
“opposite” of value investing, many value investors also employ a growth
investing mindset when settling on stocks. Growth investing is very similar, in

2. the long-term, to value stock investing strategies. Basically, if you’re investing
in stocks based on the intrinsic value of a company and its potential to grow
in the future, you’re using a growth investing strategy.
Growth investors are distinguished from strictly value investors by their focus
on young companies that have shown their potential for significant, above
average growth. Growth investors look at companies that have repeatedly
shown indications of growth and substantial or rapid increases in business
and profit.
The general theory behind growth investing is that the growth in earnings or
revenue a company generates will then be reflected by an increase in share
prices. Differing from value investors, growth investors may often buy stocks
priced at or higher than a company’s current intrinsic worth, based on the
belief that a continued high growth rate will eventually boost the company’s
intrinsic value to a substantially higher level, well above the current share price
of the stock.
Favorite financial metrics used by growth investors include earnings per share
(EPS), profit margin, and return on equity (ROE).
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A Fusion of Value and Growth
In truth, if you’re considering a long-term approach to investing, a fusion of
value and growth investing, as Buffet so effectively employs, may be worth
your consideration. There are good reasons to back up taking these stock
investment strategies.
Historically speaking, value stocks are usually the stocks of companies in
cyclical industries, which are largely made up of businesses producing goods
and services that people use their discretionary income on. The airline

3. industry is a good example; people fly more when the business cycle is on an
uptrend and fly less when it swings downward because they have more and
less discretionary income, respectively. Because of seasonality, value stocks
typically perform well in the market during times of economic recovery and
prosperity, but they are likely to fall behind when a bull market is sustained for
a long period of time.
Growth stocks typically perform better when interest rates drop and
companies’ earnings take off. They are also typically the stocks that continue
to rise even in the late stages of a long-term bull market. On the other hand,
these are usually the first stocks to take a beating when the economy slows
down.
A fusion of growth and value investing offers you the opportunity to enjoy
higher returns on your investment while reducing a substantial amount of your
risk. Theoretically, if you employ both a value investing strategy for buying
some stocks while using a growth investing strategy for buying other stocks,
you can generate optimal earnings during virtually any economic cycle, and
any fluctuations in returns will be more likely to balance out in your favor over
time.
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Passive Index Investing
Index investing is a much more passive form of investing when compared to
that of either value or growth investing. Consequently, it involves far less work
and strategizing on the part of the investor. Index investing diversifies an
investor’s money widely among various types of equities, hoping to mirror the
same returns as the overall stock market. One of the main attractions of index
investing is that many studies have shown that few strategies of picking
individual stocks outperform index investing over the long term.

4. An index investing strategy is usually followed by investing in mutual funds or
exchange-traded funds that are designed to reflect the performance of a
major stock index such as the S&P 500 or the FTSE 100.
The Bottom Line – Finding Your Own Way
Each investor has to discover their own personal stock investment strategies
that best suit their individual wants or needs, as well as their investment
“personality”. You may find that combining the three approaches discussed
here is what works best for you.
The investing strategy or strategies you employ will often change during the
course of your life as your financial situation and goals shift. Don’t be afraid to
shake things up a bit and diversify the ways in which you invest, but strive to
always maintain a firm grasp on what your investment approach entails and
how it will likely affect your portfolio and your finances.
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