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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Sunday, August 20, 2006

Growth and Value Investing

There are many different classess of stock that you can choose to diversify your portfolio. Growth and value stocks are just another way to distribute your investments.

Examing the growth of $1 invested in large cap growth, large cap value, small cap growth and small cap value on December 31, 1927-2000 you will find interesting results.

Value stocks outperformed growth stocks by a significant margin. $1 in small cap value has an average return of 14.2% with an ending balance of $16,027. Large value returns 12.4% average return with a balance ending at $5,170. On the other hand, small growth returned 10.0% and ended with $1,017 and large growth ended with $727 and a 9.4% return.

Obviously there have been periods of time that growth has outstripped value, but this information gives you insight on how to approach growth and value investing long term.


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