Who are you, exactly?by Andy Davis / April 19, 2018 / Leave a comment
Published in May 2018 issue of Prospect Magazine
If you get sufficiently interested in investment to want to do it for yourself, you can end up knowing a bit about an awful lot of subjects. Stick at it long enough and you might even learn a decent amount about one of the most important: what kind of investor are you?
It has taken me a long time to realise how central this question is. There are plenty of investment styles, two of the major ones being “value” (buying unloved stocks you judge to be cheap and waiting for them to perk up), and “growth investing,” which means buying companies with rapidly-increasing revenues and, ideally, profits. How readily you take to either of these styles, or any other, depends a lot on your personality.
I am at best an uneasy growth investor because I find it very difficult to get comfortable paying high prices for “growth companies.” This is a fundamental barrier to success since these companies never look cheap relative to most others because investors prize rapid growth above most other attributes. Some people are temperamentally equipped to pay up. Others aren’t.