Is Growth or Value Investing The Best Approach?

When Is The Best Time To Use Each?There are few topics in the world of investment that will generate more spirited debate than the respective merits of the growth or value school of investing. Both schools of thought have their adherents and their pros and cons. Both growth and value investing have enjoyed periods where they enjoyed strong returns. And they have both endured periods where they have produced disappointing results.What are the characteristics of growth and value investing? Is one approach better than another? Are there times when one should switch between the two investment philosophies?Perhaps the most important observation to be made is that the performance of the value or growth investment styles is highly dependent on the economic and market environments.Growth stocks began to significantly outperform value stocks from the start of the market low in March 2009 and the beginning of the long bull market of the past decade. This is in keeping with growth stocks’ tendency to outperform value in bull markets. There are many other examples, including the markets of the 1920s and late 1990s.The reason that growth outperforms value in strong bull markets is that such markets tend to be driven by technological changes that produce a group of fast-growing companies related to the emerging technology. These growing companies become market leaders and accrue valuations that disqualify them from being considered value stocks.The bull market of the past decade has been led by technology-related leaders such as Amazon, Facebook, Netflix, etc., which reflects the growth of online commerce. The bull market of the 1990s was propelled by the early internet stocks, while radio stocks were leaders of the strong markets of the 1920s. The great bull markets of the 19th century were the result of the building of canals and railroads, which opened…