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Good day subscribers thank you so much for joining me today i am jeremy this is the financial education channel and today we’re talking about growth investing versus value investing and after this video you guys should be able to either put yourself in one of the boxes or the other box and we’ll kind of go through some of the biggest points like seven of the biggest
Points i have here are the differences between what a growth investor is what a growth investor is looking for versus what a value investor is looking for now i can tell you personally i’m both of these and i’ll explain toward the end of the video exactly why i consider myself both a growth investor in a value investor i’ll kind of give you some pointers on on
Stocks i’m involved with that are kind of a little combination of both guys so i hope you enjoyed this they leave this video a thumbs up if you do and let’s get into this so number one growth investors are looking for companies with revenue of 15% or more companies that are fast-growing that revenue where a value investor is someone that’s been involved with the
Company that’s growing less than a 15% to be considerably less than 15% could even be negative growth so that’s kind of a difference right off the bat a grown investors they want the companies that are growing like insane revenues you know the amazon the tesla the netflix the snapchat the facebook some of these companies that the revenues are just skyrocket and
Some of the companies that are involved with you know making sure servers are safer and some of those kinds of things some of the cloud computing stocks some of the 3d printing stocks are oh i know those have fallen dramatically in the revenue went kind of down but those were at one time we’re just like growth beast you know revenues were up 50 hundred plus percent
In some of those stocks so those are a growth investors look for value in the revenues not nearly as important as some of the other metrics it’s almost non existant important compared to some of the other metrics when you’re a value investor number two growth investors revenues only matter like that’s like by far the most bigger the biggest thing it’s by far the
Biggest thing like i explained before value investors they just don’t care about revenue you value investor could be in literally an invest in a stock that has negative revenue growth that like literally they’re going down as far as revenue goes like they made less in revenue than the previous year like a value investor might still get involved with the stock like
That because a value investor it’s all about what kind of value what are you selling me they don’t necessarily care if even if the revenue is going down if the value proposition on the other end means that they can possibly make money on that then they’ll do it i mean it’s no different than if somebody said to a value investor hey i’m going to sell you this this
Hundred thousand dollar house right the house is unfortunately only going to be worth ten dollars ten years from now but you know what you can rent this house out for twenty thousand dollars a year a value investor would say okay so what it’s not going to be worth anything in ten years but if i can get twenty thousand dollars a year from that house in the meantime
I’m going to weigh more to make more money than what my investments actually worth so that’s kind of like the investor philosophy the value investor philosophy versus the growth investor who’s like i want that house to be worth millions of dollars in the future it’s all about revenue growth number three for growth investors profits do not matter they don’t matter
Like growth investors could care less about profitability especially in the short term a growth investor they don’t care if that company’s losing money they don’t care if that company lost five hundred million dollars last year 100 million dollars last year or if they made a hundred billion dollars in revenue but they only somehow profited ten million dollars on
That number they care about like i said the revenues only profits they just they don’t care about it a value investor all about the profits profits are key for value investors they’re looking at p/e ratios they’re looking at a forward p/e ratio current p/e ratio they want those p ratios generally speaking to be much lower than what the industry’s at and what the
Market in general that so if the market in general is trading at a current p/e of twenty one a value investor they’re trying to look for that current p/e of fifteen a fourteen a thirteen something like that if all the companies out there or have forward p’s on average of around eighteen of value investors looking for for pe o of thirteen twelve some of those tens
Of things guys so profits are key for value investors profits do not matter for growth investors they do not care number for the growth investor the balance sheet does not matter growth investors don’t care about how much cash the company house has much debt the company have how much insurance estimates like growth industrial they don’t care about that stuff a
Value investor puts a great emphasis on balance sheet how much does a company having cash how much does it having debt you know how strong is that balance sheet what do they have for inventory those kinds of things like a value investor really looks at that balance sheet and really cares about it a great deal growth investors are just like i don’t care about that
Give me the revenue growth what will be fine balance sheet is you know can be whatever it is we have five billion dollars in debt but we’re growing revenues 100 percent that’s what matters to a growth investor number five for growth investors quarterly reports are key especially as far as that revenue growth goes if that revenue growth awesome was to stall at the
Time you know they go they go from growing revenues like 30 percent talton a they go down to a 5% or 6% of something the stock would be absolutely destroyed because all growth investors would say whoa what is going on here we need to get out of stock asap the growth is gone for whatever reason the growth is gone so quarterly reports so key for growth investors
A value investor they’re willing to like look past a bad quarterly report of value investors like they just want to kind of watch quarterly reports to hear management’s tone to kind of make sure the company’s on progress to meet yearly numbers or long term numbers they’re not like if a company was supposed to a value investor but company opposed to report a 7%
Revenue growth or profit growth and they only did let’s say a 3% or 2% a value investors ism’s us they don’t let’s get out of that stock they’re just like okay there was a bad quarter maybe things can bounce back now or listen to some tone and those kinds of things guys so big difference growth quarterly reports are monstrous value then they’re much more forgiving
For a bad quarterly report number six growth investors do not care about dividends they don’t care about share buybacks they want that money invested back into the company to grow the company more organically a value investor many value investors care about a dividend many value investors will not invest in a stock unless they pay a dividend that’s something to
To understand write that and break that in there they also care about share buybacks they want more shares being taken off the market so as long as a company can just be as profitable last year as they were this year and so on and so forth then the p/e ratio ends up coming down as long as that stock price doesn’t move right so the company becomes even a better
Deal at that point which will then end up having to attract more value investors and they’ll push up stock price up and more up more and more and they’ll end up making money in the end so growth they just don’t care about dividend they don’t care about share buybacks value absolutely they do care about that number seven last one here and then we’ll get into why
Alma growth and value investor number seven growth investors don’t care about a management team growth investors don’t look at who’s the cfo who’s a ceo i mean growth investors might barely know who the ceo of that company is they’re not looking at the board of directors to see you know who’s on the board of directors where value investor they’re very focused on
Looking at the management teams seeing what track records they are doing research on some of these individuals and seeing how long they’ve all been together looking at the board of directors how talented is a board of directors what companies are they from how much experience they have all those kinds of things a value investor pays attention that a growth investor
They it’s not important it’s not important an end to a growth investor about who’s a ceo and you know where are they from and how long they’ve been there and that kind of stuff guys so those are the main differences between a growth investor in a value investor now i’m a mixture of both these and i’m a mixture of both because i think it’s the best way of investing
In the modern age i don’t think it’s right to just be one or the other now that doesn’t mean you can’t make money it doesn’t mean you can’t do that for me personally though it’s not the right way because growth if you’re strictly focused on a growth and you’re just focused on growth investing as soon as that growth slows and we’ve seen it company after company
After company as soon as that growth drops off those stocks drop 40 50 60 percent in a month or two a month or two guys we’ve seen it we can go down a laundry list of socks you know from the twitter’s of the world the fitbit the gopros i mean oh my gosh there’s so many socks that as soon as that growth really slows oh it gets freakin destroyed guys i mean tripoli
Is another example it comes to mind with a $700 sock then they had the e.coli situation the growth left so the growth investors left stock dropped like 40-plus percent when a few months time staying high so this can definitely is why i’m not just a growth investor and while i’m not just a value investor is because nowadays so many people are focused on growth and
You can’t just look at things from you know the perspective of companies at a 12 pe therefore i should invest in that because lower the market because we’re if that company’s profit drop another 30 percent my companies can get taken out so easily nowadays you know where companies up here and then you know somebody comes in knocks and austin’s next thing you know
They’re down here it’s faster than ever nowadays for that to happen so i’m not just one of the other you know if we look at like an investment like let’s look at my three biggest investments right now right as of doing this video at least gopro wynn resorts which have been my two mainstays for almost a year now yeah over a year a little over a year those have been
My two main stocks right and then google is my third stock if we look at all those gopro that’s a company that is a little combination of growth but value because value because it’s trading at a low enterprise value in because gopro has a great balance sheet right so that’s why you know how i’m a value investor i’m looking at balance sheet so it i can know the
Company’s going to get through the tough times right so that’s my value side but then my growth side is gopro in the last quarter grew revenues 23% so they’re a fast growing company now so i’m kind of balancing them both wynn resorts as a company that i grew revenues i think 30% somewhere around 30% this test quarter can’t remember the specific number but i think
Was around 30% and although they don’t have a great balance sheet if you compare them with other industries for their particular industry the resort industry phenomenal balance sheet phenomenal balance sheet when you compare the cash and investments compared to versus the debt for their industry that’s a great balance sheet because resort companies spend a lot of
Money on debt they take out a lot of debt with those companies so they’re fast growth and they have a great management team which is kind of my value side they have a great phenomenal management team over there that has a proven track record specifically steve wynn of 30 40 years of success nothing but success then you look at google great management team over
There arguably the best balance sheet in the entire world literally in the entire world probably the best balance sheet over there at google and then you look at there’s also fast growth there growing revenues by about 20% of the growing profits around the same so it’s a growth company but it’s also a value and you look at the p/e ratio on a company like that and
The 4p somewhere around the 21 so which is kind of low for being a faster growing company so that’s why i’m a little mixture of both these you can’t just box me in to the value vesting you know philosophy even though the warren buffett type structure the ben graham that’s my that’s my investing foundation you can just that box me into growth investing because
There’s a lot of things i look at at growth investors simply do not care about or look at guys so a little make sure a bold let me know what you guys are your your more growth investor your more value investor if you’re a little mixture of both but maybe you’re a little partial of this side or that side i would love to hear from you guys in that comment section
And share your opinion on what you think is the best and why you think it’s the best i would really love to hear from you guys there leave this video thumbs up if you enjoy and you just came across this channel you may want to subscribe we talk personal finance on the channel we talk entrepreneurship on an actual business owner i give away so many business tips we
Talk stock market investing more than anything thank you for watching guys and have a great day
Transcribed from video
Growth Investing vs Value Investing! By Financial Education