In his latest column for NASDAQ.com, Validea CEO John Reese says investors shouldn’t think they have to choose between being a value investor or a growth investor.
“While often portrayed as polar opposites, value and growth are really more like cousins,” Reese writes. “As Warren Buffett put it in his 2000 letter to Berkshire Hathaway shareholders, ‘market commentators and investment managers who glibly refer to ‘growth’ and ‘value’ styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component — usually a plus, sometimes a minus — in the value equation.'”
“What Buffett understood was that the rate a company is growing is just one factor you should use to assess its value,” Reese continues. “A firm can be producing tremendous growth, but if its shares are priced sky-high, it may not be worth your attention. Conversely, a firm’s shares can be dirt cheap, but if it has no potential to grow, its stock likely isn’t headed anywhere.”
Reese says most of the investing greats upon whom he bases his Guru Strategies used both growth and value criteria in their approaches. And he highlights a handful of Guru Strategy-approved stocks that have both excellent long-term growth track records, and cheap shares. To read the full article, click here.