On this episode of the Finance Flash Go! podcast, we cover growth versus value stocks. What in the world does that mean?!
But before I get into that, I just want to express my gratitude for all of you who have subscribed, downloaded, and listened to these podcasts! Downloads continue to climb and it has been so much fun to watch the podcast grow thanks to all of you!
Listen to the full episode here!
Ok, now let’s get into growth versus value stocks!
Well, growth stocks are stocks in companies that people estimate to have the potential to outperform the overall market over time because of their future potential.
Contrastingly, value stocks are stocks in companies that are currently trading below what people think they are really worth and will thus in theory provide a superior return.
Growth stocks are stocks that analysts consider to have the potential to outperform either the overall markets or else a specific subsegment of them. They find themselves in small, mid or large cap sectors. Moreover, they really only retain this status until analysts feel that they have achieved their potential. People expect growth stocks to outperform the overall market over time because of their future potential.
Value stocks are usually larger, well-established companies that are trading below the price that analysts feel the stock is worth. Value stocks are thought to trade below what they are really worth and will thus may theoretically provide a superior return.
So, these are relatively arbitrary distinctions
And remember, no one can predict the market! So, make the smart play and invest in low cost, broadly diversified index funds like I teach you right here!
However, it is important to understand and learn the language that other investors will use to communicate. And now you know what people mean with they talk about growth versus value stocks!
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