In his latest conversation with the India Investment Conference, Chris Mayer discussed the misuse of labels in finance and investing, and why one investor’s growth stock can be another’s value stock. Here’s an excerpt from the conversation:
So I think in finance investors particularly are prone to being overly let’s say enthusiastic about labels, or trusting them more than they should. You mentioned the growth versus value distinction. That’s a classic one.
To me that is really a rather completely arbitrary and meaningless label and people will label certain stocks growth stocks and certain stocks value stocks and they plot the value versus growth but really they’re very very arbitrary. And certain stocks included as growth stocks are also value stocks and vice versa depending on what kind of criteria you use.
Value is not necessarily something that’s objective. This is the harm of using these labels, and relying on them can lead you to believe that somehow value is an objective quality that’s out there. Value is really inherent in the people doing the evaluating and that’s why one stock could be value to somebody else and could be growth and vice versa.
You can watch the entire discussion here:
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