What is the difference between Value and Growth investment styles?
Value mangers try to purchase companies when earnings expectations are at or near their lowest point. In theory, there is little down-side risk, other than buying a company too early. In addition, value managers buy companies they expect will have an increase in their stock price due to some catalysts for this stock price increase, such as cost/debt reductions, technological breakthroughs, or new sources of earnings. Growth managers try to purchase companies that have exhibited consistent earnings growth over several quarters. They are willing to pay higher prices for this consistency and strive to find companies that are able to sustain this growth for lengthy periods. As positive press and favorable public opinion increases, stock prices are expected to increase.
