Sunday, June 11th, 2006
Growth not divorced from value
An interesting chapter from Awath Damodaran’s book Investment Philosophies challenges the myth that growth investors don’t care about value. Damodaran, a Professor of Finance at Stern School of Business at New York University, believes growth and value investors simply find ‘value’ in different places: “If value investors bet on the market getting it wrong when pricing assets, growth investors place their bets on mis-assessments of the value of growth,” he said.
He cites the success of Peter Lynch, who generated big returns running the Magellan Fund for Fidelity, in part using a GARP style method. But Damodaran also argues that growth stock screens based on high PEs and low PEG ratios work best with market timing. Market timing is at the core of success of William O’Neil’s CANSLIM strategy, for example, with the ‘M’ standing for the state of the market.
Word Count: 140. This entry was posted on Sunday, June 11th, 2006 at 1:47 pm and is filed under GARP, Methods, Value Versus Growth. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
