From a psychological point of view, I find that growth at a reasonable price investing is far more satisfying than deep value investing.
If you overpay for a strong company, you know that the passage of time is your friend. With each earnings report that propels the earnings per share rate ever higher, you get to see the intrinsic value of your ownership position increase in value. It’s fun owning things where the question is: “How much did the profits grow this year?” When the underlying profits are growing quickly, it is easy to dismiss moments when the stock price lags the growth in earnings. If earnings grow by 15% in 2016, and the stock price only advances 5%, there’s no real cause for concern unless you dramatically overpaid at the outset.
Deep value investing doesn’t usually come attached with that feel good cheer. Often, there is no guarantee that … Read the rest of this article!