Hello I will seperate this post into 6 parts and hope you could answer one by one if possible. 1. Is it normal for Growth stocks to be have a price much higher than its intrinsic value? Is this ok and sustainable? Take apple for example, is it a good growth stock at this time when its trading at more than double its intrinsic value? Or Microsoft that is trading at 3x its intrinsic value? 2.Also, for how long should you hold a growth stock for? Like, is their a target price or the idea behind this is just to grow indefinetly? 3.Should we cut your losses with growth stock or let them run at a big loss to see if they bounce back? 4.Do companies that are trading below intrinsic value for no serious reason always come back to their intrinsic value? With serious reasons I mean financial reasons and not optics like a scandal and such. 5. Should we sell a value stock as soon as it reaches intrinsic value or is there another “value” that better represents the stocks potencial. 6.WIch one would be better? Is a combination of the 2 a good choice? Like 50% of money to Value and 50% to Growth? Can this ratio be adjusted in Bull vs Bear markets or is there no correlation between the type of market and the performance of this two strategies.
I will attempt to help you, although I won't answer your questions. No rudeness is intended. Please keep in mind, investing and trading are religions. Asking the best way is asking what is the best faith. Let's dig in. Easy first. Lol! AGNC is not a growth stock. As for value, I will leave it for you to analyze. In the history of the stock market, 70% of the generated wealth has come from dividends and 30% from market cap gains. Nearly everyone wants market cap gains so they can make a quick buck. I'm one of very few who think it's a fools errand to chase growth stocks directly and on the short term. You're on your own here and I encourage you to do your own research. How long to hold.... Benjamin Graham has said that holding for less than 5 years is trading. Investing requires a 5+ year time horizon. I respect Benjamin Graham's point of view. 30 years ago, the rule of thumb I was introduced to was that a business is worth about 5 years net profit. That rule of thumb has long since gone out of fashion but I still cling to it. The only thing that knocked me off the 5 years of profit valuations is low interest rates. When rates are down, businesses can amortize out substantially further and still provide value. In a sub 2% world, 10 years does not seem unreasonable to me. So, let's look at a company like Tesla. Growth company. It would not make sense to multiply their net profit by 10 for a valuation. Their profit is not static. They are hyper-scaling so it would make more sense, at least to me, to consider annual growth each year and take the sum of that over a decade. Meanwhile, there are fairly static companies that distribute under 2% that I consider growth stocks. 2% is nothing so I analyze as growth. For me to buy a growth stock, I need the growth to be near certain and we'll beyond inflation plus a bonus. Any less and I have no interest. I analyze accordingly. A stock distributing 6% or more does not need to grow in the same way as a stock that doesn't distribute. The reason is, you can use the dividends to grow your position either manually or with a drip. I analyze these holdings completely different than I analyze a growth stock. I doubt I was all that helpful but I did what I could. Please keep in mind that equity markets are the old west. Hone your skills and do not expect charity from anyone. Other people in the market will cut your throat as quick as look at you. I recommend you do the same. We are all responsible for our own destiny so it would be inappropriate to provide any specific recommendations. "Do as I do" is a mantra here but it rarely/never works. Finally, welcome to stockaholics. I offer a heart felt wish for prosperity and success.
