Growth investing is when managers invest in companies that they believe will experience faster than average growth as measured by revenues, earnings, or cash flow. Growth companies are more likely to reinvest profits in expansion projects or acquisitions, rather than use them to pay out dividends to shareholders (Growth vs. Value Investing). Value Investing is basically trying to find a diamond in the rough. Value investing is investing in companies that don’t reflect their fundamental growth. The reason the companies are undervalued could be for a few different reason but basically the investor thinks there will be a big bounce back by that company in the market. A big difference here is the tolerance for risk. If you had a higher risk tolerance …show more content…
Large cap is a bigger part of the economy at almost 70 percent. If invested in you would be open to more exposure. Small cap investing is in companies that range in market cap from $300 million to $2 billion (Weil, 2014). Historically, small-cap stocks have outperformed large-cap stocks, but they also have been more volatile. Large-cap companies can’t grow like small-cap companies but with the higher reward, comes higher risk. A good example of a Large-cap stock would be Facebook (FB) because of how much reach it has in the market and how many different things it is involved in. It is also the largest social media company in the world. A good example of a Small-cap stock would be Spectrum Pharmaceuticals, Inc. (SPPI) because it is smaller in Cap but has made a big splash in the market. This company has significant licensing agreements which will help boost it in the …show more content…
An investor who is a contrarian will invest in the stock when it is near its lowest price or sell it at its peak. Basically a contrarian investor will go against the grain or against what other investors are doing in the market. A good stock for a contrarian would be AK Steel Holding Corporation (AKS) because the price is very low right now and with Trump wanted to use more U.S. steel in the U.S., this stock is poised to bounce back in