- Ronald Chan studied successful value investors to find the qualities that led to success.
- He realized that what’s perceived as “value” can vary based on the investor and the company.
- Individuals can be successful by investing in their circle of competence and understanding value.
Growth and value investing are two terms that are sometimes loosely thrown around. But what do they mean? And what are the benefits of each approach?
Growth investing is a strategy that emphasizes capital appreciation, or buying stocks that are expected to rake in above-average returns. For example, Cathie Wood’s firm, Ark Invest, is widely known for its basket of ETFs that leverage growth stocks. In 2020, the firm’s flagship ARK Innovation ETF (ARKK) saw about a 147% gain.
Value investing is more focused on company fundamentals, often involving stocks that are trading below their intrinsic values.