Comparison To Other Investment Models
Quality investing is an investment style that can be viewed independent of value investing and growth Investing. A quality portfolio may therefore also contain stocks with Growth and Value attributes.
Nowadays, Value Investing is based first and foremost on stock valuation. Certain valuation coefficients, such as the price/earnings and price/book ratios, are key elements here. Value is defined either by valuation level relative to the overall market or to the sector, or as the opposite of Growth. An analysis of the company's fundamentals is therefore secondary. Consequently, a Value investor will buy a company's stock because he believes that it is undervalued and that the company is a good one. A quality investor, meanwhile, will buy a company's stock because it is an excellent company that is also attractively valued.
Modern Growth Investing centers primarily on Growth stocks. The investor's decision rests equally on experts' profit forecasts and the company's earnings per share. Only stocks that are believed to generate high future profits and a strong growth in earnings per share are admitted to a Growth investor's portfolio. The share price at which these anticipated profits are bought, and the fundamental basis for growth, are secondary considerations. Growth investors thus focus on stocks exhibiting strong earnings expansion and high profit expectations, regardless of their valuation. Quality investors, meanwhile, favor stocks whose high earnings growth is rooted in a sound fundamental basis and whose price is justified.
Read more about this topic: Quality Investing
Famous quotes containing the words comparison to, comparison, investment and/or models:
“In comparison to the French Revolution, the American Revolution has come to seem a parochial and rather dull event. This, despite the fact that the American Revolution was successful—realizing the purposes of the revolutionaries and establishing a durable political regime—while the French Revolution was a resounding failure, devouring its own children and leading to an imperial despotism, followed by an eventual restoration of the monarchy.”
—Irving Kristol (b. 1920)
“Most parents aren’t even aware of how often they compare their children. . . . Comparisons carry the suggestion that specific conditions exist for parental love and acceptance. Thus, even when one child comes out on top in a comparison she is left feeling uneasy about the tenuousness of her position and the possibility of faring less well in the next comparison.”
—Marianne E. Neifert (20th century)
“The only thing that was dispensed free to the old New Bedford whalemen was a Bible. A well-known owner of one of that city’s whaling fleets once described the Bible as the best cheap investment a shipowner could make.”
—For the State of Massachusetts, U.S. public relief program (1935-1943)
“French rhetorical models are too narrow for the English tradition. Most pernicious of French imports is the notion that there is no person behind a text. Is there anything more affected, aggressive, and relentlessly concrete than a Parisan intellectual behind his/her turgid text? The Parisian is a provincial when he pretends to speak for the universe.”
—Camille Paglia (b. 1947)