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Buffett, growth, value and you

"Warren Buffett closes in on Cathie Wood as tech stocks tumble."

Buffett, growth, value and you

The message that the headline (see the sub-title above) in 'The Financial Times' was trying to convey was clear. There is someone called Cathie Wood - presumably an investor or possibly a fund manager - and Warren Buffett had fallen behind her by some measure of investing returns, and now Buffett had caught up with her. The headline also implies that there is some kind of a competition where Buffett did badly but has now almost defeated the previous champion, somewhat like the underdog athlete in the closing stages of a sports-themed movie. Now, in the final scene, the old man will step up to the podium and receive a gold medal from the editors of the newspaper. As Buffett fans, I guess we should be happy that 'The Financial Times' is trying so hard to engage and entertain us.

Cathie Wood, by the way, is the fund manager of an ETF named Ark Invest's Innovation, which is generally known by its stock market ticker ARKK. Don't ask why the fund manager is important at all in an ETF because that's a whole separate story. Disregard for the moment the identity crisis here - Berkshire and ARKK are not the same sorts of creatures at all. ARKK is an ETF but as ETFs tend to be nowadays, a passive fund that is actually sort of actively managed. Berkshire is a holding company that can be considered an investment vehicle because of the way Buffett and Munger run it.

I then came upon a different headline, this one in Bloomberg, which is no less a reputed commentator on money matters than 'The Financial Times':
"Wood, Buffett Post Similar 2-Year Gain With Divergent Strategies."

Hmmm... That's the exact same underlying facts that the two headlines are talking about. Here's what actually happened. After the initial brief collapse, the ARKK fund did fabulously well in the first half of the pandemic and then fell sharply. Berkshire Hathaway, after the initial collapse, kept rising steadily throughout the pandemic and now they have both ended up with the same returns over the whole period as a whole.

If you look at the two headlines and their stories together, you discover that the financial media can spin anything to prove their point. The point FT wants to prove is that there is a swing from growth stocks, which ARKK is heavy on, to value stocks, which is what Berkshire is supposedly all about. Bloomberg, in sharp contrast, is making the point that whether you did growth or value, you ended up with the same returns through the pandemic markets.

The funny thing is that both are right and yet both are wrong. Well, not wrong factually but for investors like you or me, both are useless and in fact, paying attention to opinions like this may be harmful to us.

This growth vs value stocks is a question that I get a lot in the context of Value Research Stock Advisor. As you may have been able to figure out (there's a big hint in the name I gave my company which could help you guess), I have a natural bias towards one of these two types. However, that does not directly affect what we recommend under Value Research Stock Advisor.

To the question of what kind of stocks we recommend in Stock Advisor, the answer is simple: we recommend stocks that will make money for you.

This sounds like a non-answer to some people but it's not. It does avoid saying the kind of things that some investors expect because jargon like value stocks, growth stocks, or large/mid-small or contrarian stocks is not there. If you want the jargon and news stories that are force-fitted to the jargon, then you can read FT or Bloomberg or the rest of the money media. Our job is something very different.

In Value Research Stock Advisor, there is only one stream of recommendations - a list of stocks you should buy. That does not mean at all that we don't look at concepts like growth or value. Far from it. These factors are central to our evaluation of stocks, along with many others. However, looking at them is our job, not yours. They have to be weighed along with each other and against each other in order to decide whether a stock is worthy of investing.

However - and this is a key point - while looking at all this is our job, it's not like we are preventing you from doing so. In fact, through the investment thesis for each stock, as well as the tools that you get along with your membership of Stock Advisor, you can have deep knowledge of the stocks that we recommend. Indeed, since our bundled research tools are loaded with complete data of every stock in the Indian markets, you can do the same for any other stock also. What we have is not just a stock-recommendation service but a complete confidence-supplying system, whether you are into growth or value or anything else.

All in all, this is what you get:

  • Access to all our (currently 52) stock picks.
  • Best Buy Stocks: 18 stocks selected from our recommendations. Use this set to start building your portfolio right away!
  • The complete investment thesis for all recommended stocks to understand why you are investing.
  • New recommendations as soon as they are released.
  • Continuous updates and analysis on all recommended stocks straight from our dedicated analyst team.