CHARLOTTE – Name two distinct styles of investing…AND GO! Ding ding ding if the first thing that came to mind was growth and value investing, you win the prize! In this article we will discuss the meaning of both of these styles as well as if one is favored more during the market we are in.
Let’s begin with growth. Growth companies tend to be those with revenues growing faster than their broader markets. They do not typically pay dividends and historically have been more volatile. Growth stocks are usually priced higher than the broader market because investors are willing to bet on their potential for continued earnings growth. In contrast, value stocks are generally considered less expensive compared to the broader market or their own intrinsic value. They tend to be more mature companies with less opportunity for earnings growth and compensate investors with dividend payments.
As we move through a slowing growth environment, heightened volatility is expected to remain. Tilting the portfolio towards one style or another could benefit portfolios, but not having exposure to a style when the market turns could be detrimental to the long-term goals of a portfolio.
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This article was written and released by AssetMark for use by your local Cambridge Investment Research Financial Advisor.
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