Connect with us


Finance: Growth or value stocks, that is the question



PHUKET: Many investors do not understand the differences between growth stocks and value stocks, with the latter often being synonymous with Warren Buffett, the disciple of Benjamin Graham, who’s classic 1949 book The Intelligent Investor is considered the value stock investing bible.


Growth stocks tend to be high-quality stocks of successful companies whose earnings are expected to continue growing at an above-average rate relative to the overall stock market. For that reason, growth stocks tend to have high price-to-earnings (P/E) ratios and high price-to-book ratios.

This means that some investors may view growth stocks as being ‘expensive’. However, growth stocks should be viewed the same way you would view high-performance cars. For example, you will pay more for a Ferrari than you will for a Volkswagen, but the former will give you a much better performance. That’s why they cost more.

On the other hand, growth stocks can come with more risks as they tend to fall harder on adverse news or any earnings report that does not live up to the often lofty expectations of Wall Street.


Value stocks generally have good fundamentals or potential, but come with low P/E ratios and price-to-book ratios because the market is valuing their shares below their actual or potential value. There can be many reasons why this occurs and often it’s because the company is having problems that concern investors, the stock (or the sector it is in) has fallen out of favor, or the stock is not yet well known enough on Wall Street.

Investors in value stocks tend to have a long-term time horizon and are betting that the market will eventually recognize a value stock as being undervalued. On the other hand, and as with the items marked down in a store’s discount bin, sometimes you are getting what you pay for, such as something that is actually damaged. Plus, there is always the risk that the overall market will never recognize a value stock’s true worth.

Investors also need to remember that even when Warren Buffett invests in a so-called value stock or company, he isn’t overly concerned about whether or not the market will eventually recognize its true worth. What he is concerned about is how well the company can make profits and cash-flow, because often he is essentially buying the entire business – not just a few shares.


Growth and value stock investing are two different investing styles with neither approach guaranteed to be a winner and both coming with their share of risks. There’s also no clear historical data pointing to which investing style has conclusively led to the highest overall returns over time.

Moreover, the market tends to favor one form of investing over the other in cycles and not both at once. For example, value stocks tend to do well early in an economic recovery, as they are often in cyclical industries that get beaten down during recessions and bear markets, while growth stocks tend to lead bull markets when interest rates are low and corporate earnings are increasing.

Since growth and value stocks tend to not move in the same direction at the same time, investors should be invested in both types of stocks to achieve better overall portfolio returns and lower their risk through diversification. In fact, that’s usually the investing strategy employed by most professional fund managers with even Warren Buffett once remarking that ‘growth and value investing are joined at the hip’.

Still have questions about investing in growth or value stocks?

Don Freeman, BSME is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket. He has over 15 years’ experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Call for a free portfolio review. Don can be reached at: 089-970-5795 or email:

— Don Freeman


Get more from The Thaiger

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Press Room15 mins ago

The Asia Fitness Conference 2022: A must-attend event for fitness enthusiasts and professionals

Thailand42 mins ago

Thai Airways releases details of winter flights itinerary

Thailand43 mins ago

Tourist Attractions To Open For Longer Hours | GMT

Sponsored35 mins ago

International money transfers made fast, secure and transparent with DeeMoney Neo App

Property News1 hour ago

Phuket real estate shifts tide in wake of urban flight

Road deaths16 hours ago

Dead woman in car pulled out of Kanchana Buri canal

World17 hours ago

As Iran revolts, president vows to deal with protests

Join the conversation on the Thaiger Talk forums today!
Election17 hours ago

POLL: Top 2 picks for prime minister are “nobody” and Ex-PM’s daughter

China18 hours ago

No word from China on Xi military coup whispers

Pattaya18 hours ago

Intoxicated Pattaya tourist allegedly punches elderly Australian man in face

Thailand19 hours ago

Thai TikTok star detained at Singapore airport over huge amount of cash

Kanchanaburi20 hours ago

Kanchanaburi school director found dead in canal

Pattaya21 hours ago

Small children in Pattaya learn to get help when locked in hot cars

Chiang Mai22 hours ago

Heavy rains collapse part of Chiang Mai’s ancient city wall

Events22 hours ago

6-hour whiskey drinking contest draws criticism

Pattaya23 hours ago

Pattaya official urges mayor to expand legal nightlife zone

Thailand1 year ago

Morning Top Stories Thailand | Police to end protests, Human Trafficking | September 14

Thailand2 years ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism2 years ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket2 years ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism2 years ago

Phuket Thai food treats you need to try | VIDEO

Thailand2 years ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism2 years ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand2 years ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand2 years ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand2 years ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand2 years ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand2 years ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand2 years ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand2 years ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand2 years ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11