Relevance Of Value Investing

Looking at the current mood in the market and the way new investors think about stock valuation, it looks like the concept of value investing is outdated. Yogesh Supekar discusses why value investing is not something one should say goodbye to and that it matters even today when everyone is chasing growth

- Yogesh Supekar

With the markets touching fresh all-time highs and stocks delivering unbelievable returns in a matter of months if not weeks, the classic debate of value investing versus growth investing has gathered steam. For those chasing stock prices without knowing the value of stocks, the fun ride is too good to spend time on identifying the value. Why spend time identifying value when by chasing prices one can become rich, and quickly! Besides, who wants to wait for years to bag multi-bagger returns when by investing in trending stocks you can quickly double your money? Once again in the past year or so we have seen the growth investing style becoming highly popular and fabulously rewarding the high-risk takers.

What one is not sure though is whether a similar high risktaking strategy will be rewarded in same magnitude in the coming quarters and years. In other words, will growth investing once again work in the coming 1-3 years or is it the time to focus on the merits of value investing? Investors better find an answer to this question and that too quickly before it’s too late. It looks like we are in that kind of a liquidity-driven rally where even a 5 per cent market correction is going to damage the portfolio structure and returns in a grave manner. The stocks have been in an upward trajectory a lot and higher the stock prices jump in quick time the shakier they become.