Don’t be dogmatic about investment strategies
For many investors, value and growth strategies seem diametrically opposed. With the first strategy, you look for undervalued stocks, comparing current valuation ratios with their historic range; with the second, you want stocks whose earnings are expected to outstrip their sector or the overall market.
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For many investors, value and growth strategies seem diametrically opposed. With the first strategy, you look for undervalued stocks, comparing current valuation ratios with their historic range; with the second, you want stocks whose earnings are expected to outstrip their sector or the overall market.
Many investors see themselves as being exclusively in one camp or the other, says Dominic Picarda in Investors Chronicle leading to blinkered thinking and lower returns. Far better to consider switching between these strategies.
For example, value investing has "worked a treat" in recent years, but it "can't win every year". And while there's little sign of an imminent growth revival, a significant economic slowdown could "make value come unstuck".
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If you fear the worst for the world economy in 2006, some of the "likeliest looking growth shares", he reckons, are PartyGaming (PRTY,109p), GlaxoSmithKline (GSK, 1,459p), Smith & Nephew (SN, 510p), Acambis (ACM, 210p), BritishSkyBroadcasting (BSY, 499p), Vodafone (VODN, 128p) and Virgin Mobile (VMOB, 305p).
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
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