Читать книгу Investing All-in-One For Dummies - Eric Tyson - Страница 150

IN THIS CHAPTER

Balancing growth and value

Using strategies to select good growth stocks

What’s the number-one reason people invest in stocks? To grow their wealth (also referred to as capital appreciation). Yes, some people invest for income (in the form of dividends), but that’s a different matter (see Chapter 3 in Book 3). Investors seeking growth would rather see the money that could have been distributed as dividends be reinvested in the company so that (hopefully) a greater gain is achieved when the stock’s price rises or appreciates. People interested in growing their wealth see stocks as one of the convenient ways to do it. Growth stocks tend to be riskier than other categories of stocks, but they offer excellent long-term prospects for making the big bucks. Just ask Warren Buffett, Peter Lynch, and other successful, long-term investors.

Although someone like Buffett is not considered a growth investor, his long-term, value-oriented approach has been a successful growth strategy. If you’re the type of investor who has enough time to let somewhat risky stocks trend upward or who has enough money so that a loss won’t devastate you financially, then growth stocks are definitely for you. As they say, no guts, no glory. The challenge is to figure out which stocks make you richer quicker; this chapter gives you tips on how to do so.

Short of starting your own business, stock investing is the best way to profit from a business venture. To make money in stocks consistently over the long haul, you must remember that you’re investing in a company; buying the stock is just a means for you to participate in the company’s success (or failure). Why does it matter that you think of stock investing as buying a company versus buying a stock? Invest in a stock only if you’re just as excited about it as you would be if you were the CEO in charge of running the company. If you’re the sole owner of the company, do you act differently than one of a legion of obscure stockholders? Of course you do. As the firm’s owner, you have a greater interest in the company. You have a strong desire to know how the enterprise is doing. As you invest in stocks, make believe that you’re the owner, and take an active interest in the company’s products, services, sales, earnings, and so on. This attitude and discipline can enhance your goals as a stock investor. This approach is especially important if your investment goal is growth.