Value vs. Growth

Investing is often divided into value investing and growth investing. This is wrong.

Value investors “believe” in buying assets for less than they are worth today. Growth investors “believe” that investing in fast-growing companies is more important than investing in companies at a discount to real value.

Both schools of thought have some merit; you must own businesses which are trading below what they are worth to be able to generate any return. It is also important to own businesses which will, at the very least, exist in the future, if not grow, if you want to be able to generate returns over long time-periods. 

Indeed, as Howard Marks says, ‘All investors try to buy value – that is, to buy something for less than it’ll turn out to be worth’. One might say that Value investors are focussed on the present and can’t help having to deal with the future, whereas Growth investors are focussed on the future, and are compelled to consider the present. Marks believes that the choice isn’t one of value vs. growth but one of “value today” vs. “value tomorrow”.