ILMA Compoundings March 2017 - 28

BUSINESS HUB

Growth, Value or Both
By Murray Carter

T

he terms "growth" and "value"
are often used to describe two
different investment strategies,
yet many investors may want both
qualities in an investment. Famed
investor Warren Buffett put it this way
in a 2015 interview: "I always say if
you aren't investing for value, what are
you investing for? And the idea that
value and growth are two different
things makes no sense. ... Growth is
part of the value equation."1
Even so, analysts might look
at specific stocks as offering more
growth potential than value, and vice
versa. And these concepts are used

to construct many mutual funds and
exchange-traded funds (ETFs). So, it's
helpful to understand the opposing
ideas, even if you want the best of
both in your portfolio.
POISED TO GROW?
As the name suggests, growth stocks
are associated with companies that
appear to have above-average growth
potential. These companies might be
on the verge of a market breakthrough
or acquisition, or they might occupy a
strong position in a growing industry.
Growth companies might place more
emphasis on reinvesting profits than on

The Herd Gets It Wrong ... Again.
Tuesday, Nov. 8: Election night. An unexpected outcome leads to an all-tooexpected reaction. Nov. 9 was reported as being the most active trading day of the
year for 401(k) participants, with a massive amount of money moving out of stock
funds and into bond funds. Stocks have since rallied roughly 5 percent and bonds
are down roughly 2.25 percent through the time of this writing.
Dramatically altering your asset allocation should only occur when there has been
a material change in your life, not perceived changes in the market. If you had a balanced portfolio moving into the election, there was likely nothing to do in reaction to
the results but to remain in that allocation. The key to long-term success is to have
your accounts constructed in a thoughtful way based on your goals and needs.
The value of advice: Keeping focused on long-term goals is sometimes very
difficult in the face of "scary" short-term news and volatile short-term market
movement. Many times, these moments cause individuals to react emotionally.
Before considering a change in your asset allocation, consult an advisor. For most
people in a 401(k), there is a team of professionals available to field calls for general advice; use that feature. For perspective, ask people who are in the business
of allocating investments and bound by a fiduciary duty to serve your best interests what they are doing with their clients' assets. Take a moment to pause, seek
counsel and make a more informed decision. Doing so consistently can have a
measurable impact on your long-term success.

28

MARCH 2017

| COMPOUNDINGS | ILMA.ORG

paying dividends (although many large
growth companies do offer dividends).
Investors hope to benefit from future
capital appreciation of growth stocks,
which tend to be considered higher risk
than value stocks. However, it's equally
important for growth and value stocks
to have strong fundamentals.
UNDERVALUED?
Value stocks are associated with
companies that appear to be undervalued by the market or are in an industry
that is currently out of favor. Unlike
growth stocks, which might seem
expensive and overvalued, value stocks
may be priced lower in relation to their
earnings, assets or growth potential.
Established companies are more
likely than younger companies to
be considered value stocks, and
these firms might emphasize paying
dividends over reinvesting profits. An
investor who purchases a value stock
typically expects the broader market
to eventually recognize the company's
full potential, which might result in
rising share prices. One risk with this
approach is that a stock considered
to be undervalued because of legal
or management difficulties or tough
competition might not be able to
recover from the setback.
FOCUSED FUNDS
Identifying specific growth or value
investments requires time, knowledge
and experience in analyzing stock data.
A more convenient and accessible
way to add growth or value stocks
to your portfolio might be through
mutual funds or ETFs that focus on
these categories. Such funds often


http://www.ILMA.ORG

ILMA Compoundings March 2017

Table of Contents for the Digital Edition of ILMA Compoundings March 2017

LETTER FROM THE CEO
INSIDE ILMA
WHAT’S COMING UP
INDUSTRY RUNDOWN
PROVIDING FOODGRADE LUBRICANTS IN A GLOBAL MARKETPLACE
BIODEGRADABLE LUBRICANTS PRIMER
GROUP I RE-REFINERS DOMINATE ASIA-PACIFIC
BUSINESS HUB
COUNSEL COMPOUND
WASHINGTON LANDSCAPE
IN NETWORK42
PORTRAIT
ILMA Compoundings March 2017 - Cover1
ILMA Compoundings March 2017 - Cover2
ILMA Compoundings March 2017 - 1
ILMA Compoundings March 2017 - 2
ILMA Compoundings March 2017 - LETTER FROM THE CEO
ILMA Compoundings March 2017 - INSIDE ILMA
ILMA Compoundings March 2017 - 5
ILMA Compoundings March 2017 - WHAT’S COMING UP
ILMA Compoundings March 2017 - 7
ILMA Compoundings March 2017 - INDUSTRY RUNDOWN
ILMA Compoundings March 2017 - 9
ILMA Compoundings March 2017 - 10
ILMA Compoundings March 2017 - 11
ILMA Compoundings March 2017 - 12
ILMA Compoundings March 2017 - 13
ILMA Compoundings March 2017 - PROVIDING FOODGRADE LUBRICANTS IN A GLOBAL MARKETPLACE
ILMA Compoundings March 2017 - 15
ILMA Compoundings March 2017 - 16
ILMA Compoundings March 2017 - 17
ILMA Compoundings March 2017 - 18
ILMA Compoundings March 2017 - 19
ILMA Compoundings March 2017 - BIODEGRADABLE LUBRICANTS PRIMER
ILMA Compoundings March 2017 - 21
ILMA Compoundings March 2017 - 22
ILMA Compoundings March 2017 - 23
ILMA Compoundings March 2017 - GROUP I RE-REFINERS DOMINATE ASIA-PACIFIC
ILMA Compoundings March 2017 - 25
ILMA Compoundings March 2017 - 26
ILMA Compoundings March 2017 - 27
ILMA Compoundings March 2017 - BUSINESS HUB
ILMA Compoundings March 2017 - 29
ILMA Compoundings March 2017 - COUNSEL COMPOUND
ILMA Compoundings March 2017 - 31
ILMA Compoundings March 2017 - WASHINGTON LANDSCAPE
ILMA Compoundings March 2017 - 33
ILMA Compoundings March 2017 - IN NETWORK42
ILMA Compoundings March 2017 - 35
ILMA Compoundings March 2017 - 36
ILMA Compoundings March 2017 - 37
ILMA Compoundings March 2017 - 38
ILMA Compoundings March 2017 - 39
ILMA Compoundings March 2017 - PORTRAIT
ILMA Compoundings March 2017 - Cover3
ILMA Compoundings March 2017 - Cover4
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