value or growth

There is never a single approach to make money; this is granted. Each should embrace one that suits the temperament. Yet, there is only one way we can make money: buy low and sell high. Of course, we can sell first and buy later; however, the essence is the same. 

In investing, two types of approaches are well talked about. One is value investing, and the other is growth investing. Each camp is eager to take on the other. And boy, aren't those value investors too proud of their pedigree? 

I am going to keep a detailed post for some other time. At the moment, let's just highlight what the world thinks of these two approaches. Value investing is construed to be picking securities at low prices such as low price-earnings, low price-book values, high dividend yields. The key for value investors is bargain prices; they like to call it statistical bargains. Whereas growth investing is taken to be investing in stocks that have higher than normal growth rates. The key for growth investors is the growth rate, not price. 

I am not in either camp. It is better to be an investor than a value or growth investor. If investing is all about buying securities that are priced lower than value, that's all we need to think about. 

If what is given away is higher than what is received, it is not a business-like transaction. There are other places where such actions are applauded. That person will be well served if charity work is taken up; even here one can feel what is given away is lower than what is received; the pleasure of giving is beyond any pricing. 

In business and investing, profits are made by buying low and selling high. The focus therefore should be on the present value of cash flows and price paid. Four things are of importance here: There should be mispricing, which should be identified and then taken advantage of, and finally, the markets should correct that mispricing. 

In investing, the predominant factor is the mispricing of securities, not the type of securities or the period of holding. For an exceptional business, the longer the holding period, the higher the returns. For a low quality business, it is preferable to close out the transaction as soon as mispricing is eliminated by the market. When low risk arbitrage opportunities are available, the transaction period can be much shorter. 

All investing is value investing, for what is investing without value? Similarly, it isn't investing, if price paid for growth is higher than value of growth. It is a mistake to separate the two. And we know that if it is not an investment, it is actually a speculation. Heck!