Value and Growth Stocks

Decent Essays

Ownership of a corporation is divided into shares is called Stock. The person who owns a stock is a shareholder. The major shareholders of the corporation elect board of directors. The shareholders would not have direct control because, in a corporation, direct control and ownership are often separate. Board of directors makes rules on how the corporation should run and delegates the decision making to corporate management team. The Corporate management team will consists of Chief executive officer (CEO) and Chief financial officer (CFO). The main important job of a financial managers is to make best decision to increase the value of the company which would increase the value of stock invested by the investors. Corporation would also …show more content…

small cap growth when using Russell Indices) (Fisher, 2014). Since Value stocks proved historically more consistent, I would prefer to invest major of my investment in low-valued Value stocks than higher priced Growth stocks. Because the value stocks are expected to rise the stock value in a long term, I would also invest small margin of my investment on high-quality Growth stock. Allocating a portfolio 100% to value stocks is not going to be a consistently winning strategy. So in my Investment portfolio, I would have an eighty-twenty investment on Value and Growth type respectively. It is always good to invest in long term value stocks. A more manageable view might be 15 years. If you invest $10,000 today in a stock that returns an average of 12% per year (a return that is two percentage points higher than the historic long-term return of Standard & Poor’s 500-stock index), you’ll end up with about $55,000. Not all companies stocks are good for long term. A company should have six characteristics for long term investment. A company you expect to be wedded to for 15 years should have following six characteristics. Products that can endure and aren’t fads; a history of leaders who can adapt; a strong balance sheet; a benign competitive environment; a track record of innovation balanced by vigilance against taking on too much risk; and a strategy

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