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Don’t Make Me Say I Told You So 105

focuses on buying stocks that sell at bargain prices, these
investors claim there is a margin of safety that will cushion the

stock price in case company earnings later prove disappointing,
or if the stock market as a whole takes a tumble.

Growth investors counter that many stocks sell at low prices
relative to their peers, not because they have been overlooked

or misjudged, but because their future earnings prospects are

not good. Growth investors believe that companies with better-
than-average growth prospects are worth paying a premium
for, even if their current near-term earnings don’t seem to justify

the price.

Some notable investors like Warren Buffett feel that there is no

real difference between value and growth investing. Both seek

to buy undervalued stocks with the promise of future growth
in the price of the stock.Value and growth investors each have

evidence to support their views. There have been many time

periods when value stocks outperformed growth stocks, and

other times when growth outperformed value.

Growth and Value Cycles

Between 1970 and 2019, value stocks outperformed growth

stocks by a large margin. This does not mean, of course, that

Chapter 3: You Must Have Growth In Your Portfolio