{"id":10407,"date":"2022-12-21T23:56:00","date_gmt":"2022-12-21T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=10407"},"modified":"2025-12-10T11:19:18","modified_gmt":"2025-12-10T03:19:18","slug":"growth-vs-value-investing","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/","title":{"rendered":"Growth vs. Value Investing, Buffett&#8217;s view"},"content":{"rendered":"\n<p>It&#8217;s an argument between growth vs. value investing. We&#8217;ll uncover Buffett&#8217;s view on growth vs. value investing in this post.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/#Value_investing_fundamental\" >Value investing fundamental<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/#Buffetts_evolution\" >Buffett&#8217;s evolution<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/#Growth_investing_fundamental\" >Growth investing fundamental<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/#Peoples_misunderstanding\" >People&#8217;s misunderstanding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/#Growth_is_a_component_of_value\" >Growth is a component of value<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/#Growth_value_needs_to_be_justified\" >Growth value needs to be&nbsp;justified<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/#Mungers_view\" >Munger&#8217;s view<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/#Closing_words\" >Closing words<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Value_investing_fundamental\"><\/span>Value investing fundamental<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Buffett is known for his advocacy of the value investing paradigm \u2014 buying shares of companies that are underpriced relative to their value according to some kind of analysis of company fundamentals, meaning its dividend yield, price-to-earnings multiple, price-to-book ratio, and so on.<\/p>\n\n\n\n<p>Buffett\u2019s personal formulation of the strategy is simply&nbsp;\u201cfinding an outstanding company at a sensible price\u201d as opposed to finding mediocre companies for cheap prices.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Buffetts_evolution\"><\/span>Buffett&#8217;s evolution<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>But his embrace of&nbsp;\u201cvalue investing\u201d does not mean Buffett is skeptical of growth \u2014 it just means he avoids investing in companies&nbsp;solely&nbsp;because he thinks they have the potential to grow much larger than they are.<\/p>\n\n\n\n<p>For a long time, however, Buffett notes in his&nbsp;<a href=\"http:\/\/www.berkshirehathaway.com\/letters\/1992.html\" target=\"_blank\" rel=\"noreferrer noopener\">1992&nbsp;shareholders letter<\/a>, investors interested in&nbsp;\u201cvalue\u201d and investors interested in&nbsp;\u201cgrowth\u201d have been considered to be at odds.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Growth_investing_fundamental\"><\/span>Growth investing fundamental<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Growth investors, the thinking goes, primarily look for companies that show they can grow at an above average rate. Companies that growth investors like might look expensive today, but are worth it if they are going to grow at or above the expected rate.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Peoples_misunderstanding\"><\/span>People&#8217;s misunderstanding<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Value investors, on the other hand, purportedly ignore potential growth as a function in their fundamental analysis.<\/p>\n\n\n\n<p>Buffett rejects this contrast, proudly proclaiming that&nbsp;\u201cgrowth and value investing are joined at the hip.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Growth_is_a_component_of_value\"><\/span>Growth is a component of value<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>\u201cMost analysts feel they must choose between two approaches customarily thought to be in opposition: \u2018value\u2019 and \u2018growth,\u2019\u201d he wrote in his&nbsp;1992&nbsp;letter.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cWe view that as fuzzy thinking (in which, it must be confessed, I myself engaged some years ago)\u2026 Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive,\u201d he adds.<\/p>\n<\/blockquote>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignleft size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"231\" height=\"105\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/07\/ET-Money.jpg\" alt=\"Growth vs. Value\" class=\"wp-image-12255\"\/><figcaption class=\"wp-element-caption\">Credit: ET Money<\/figcaption><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Growth_value_needs_to_be_justified\"><\/span>Growth value needs to be&nbsp;justified<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Value investing, for Buffett, means&nbsp;\u201cseeking value at least sufficient to justify the amount paid.\u201d Valuing a company higher because you expect it to exhibit healthy long-term growth is not the same as investing in a company solely because you believe it will grow and&nbsp;<em>then<\/em>&nbsp;justifying your valuation \u2014 a practice which Buffett is not fond of.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Mungers_view\"><\/span>Munger&#8217;s view<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Charlie Munger has made it clear: &#8220;All intelligent investing&nbsp;is value investing, acquiring more than you are paying for. You must value the business in order to value the stock.&#8221; His words are very similar to Buffett&#8217;s views.<\/p>\n\n\n\n<p>This quote illustrates value investing. Investing in stocks is all about judging the gap between &#8220;price&#8221; and &#8220;value&#8221; and acting accordingly. Munger believes that each share of stock represents a part of the company&#8217;s basic business, so to understand the value of the stock, it is necessary to evaluate the value of the basic business.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Closing_words\"><\/span>Closing words<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Keep in mind what Buffett wrote: &#8220;Growth is&nbsp;<em>always<\/em>&nbsp;a component in the calculation of value.&#8221;<\/p>\n\n\n\n<p>Value investing and growth investing share the same philosophy: value is the discounted value of the investment&#8217;s future present cash flows, while growth is only a prediction process used to determine value.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li> &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/17\/why-i-prefer-growth-stocks-instead-of-value-stocks\/\">Why I prefer growth stocks instead of value stocks?<\/a>&#8221; <\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/12\/08\/investing-for-growth\/\">Investing for growth<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/21\/growth-vs-value-investing\/\">Growth vs. Value Investing, Buffett&#8217;s view<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/09\/29\/inflation-and-rate\/\">Tax, inflation and rate are the top three serious killers to investors<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/06\/03\/growth-stocks-plunge-2\/\">Why growth stocks plunge, part two<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/31\/growth-stocks-plunge-1\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why growth stocks plunge, part one<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/13\/nike-growth-role-model\/\">How does Nike make money? The role model of growth stocks in non-tech industry<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/16\/civilian-production\/\" target=\"_blank\" rel=\"noreferrer noopener\">Discover the possibility of super growth stocks in the civilian production industry<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/23\/value-investing\/\" target=\"_blank\" rel=\"noreferrer noopener\">The past and present of value investing<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/07\/buffett-deserves-study\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why Buffett deserves further study?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/07\/buffett-investment-idea\/\">What helps Buffett to get his investment idea?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/23\/value-investing\/\" target=\"_blank\" rel=\"noreferrer noopener\">The past and present of value investing<\/a>&#8220;<\/li>\n\n\n\n<li><a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/07\/cigar-butt-investment\/\" target=\"_blank\" rel=\"noreferrer noopener\">&#8220;Problems with Cigar Butt Investment<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/27\/buffett-portfolio\/\" target=\"_blank\" rel=\"noreferrer noopener\">The commonalities of Buffett portfolio \u2013 cheap, fixed income, repurchase<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>It&#8217;s an argument between growth vs. value investing: value is the discounted value of the investment&#8217;s future present cash flows, while growth is only a prediction process used to determine value.<\/p>\n","protected":false},"author":1,"featured_media":12255,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33,32,11],"tags":[],"class_list":["post-10407","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-growth-investing","category-value-investing","category-buffett"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/10407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=10407"}],"version-history":[{"count":21,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/10407\/revisions"}],"predecessor-version":[{"id":40551,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/10407\/revisions\/40551"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/12255"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=10407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=10407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=10407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}