At Barnett & Company we believe
it is typical in the world of investing for
perception to change faster than reality. We
recognize the wisdom in buying investments that
are believed to be the ones other investors
will want to own in the future and avoiding
those that are over-popular in the present.
This approach categorizes us as value managers.
In the greater scheme of things most fund managers
are known as either growth or value types. The
terms are misleading since one cannot have value
without growth nor growth without value. What
they do imply is an investment manager's approach
to investing.
• Growth managers tend to look primarily
at the big picture in anticipating the next
investment fad or fashion, paying less attention
to the current price and specifics of a stock.
Growth investing can be characterized as momentum
investing in that growth managers try to buy
stocks that are increasing in value faster than
the overall market and then attempt to sell
before they turn down.
• By contrast, value managers tend to
approach investing more from the bottom up.
By screening for certain attributes the value
manager attempts to discern the case that can
be made for purchasing a given stock. A stock's
investment value is viewed as a cushion for
any downside it may exhibit. Its upside is determined
by looking at a number of other factors that
are not currently priced into the stock.
Today, for example, many investors tend to focus
primarily and perhaps obsessively on earnings
forecasts when deciding what to buy. The health
of a company, as evidenced by its balance sheet,
is often overlooked.
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