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Paul,

That's an interesting idea, that 'value' investing might be easier for beginning investors than 'growth' investing. Not so much to disagree which you --because I haven't given the matter much thought, for thinking both are hard for anyone to do well, beginners or the more experienced. But let me pick up on your mention of PEs as a possible indicator of whether a stock might be worth betting on.

If a stock is a claim on a company's future earnings, then PEs might be a good measure of under/over-valued. But earning growth matters, too, because earnings aren't linear, no matter how much the CFOs twist GAAP rules to make them look so. Hence, PEG ratios need to be looked at, as well as how clean the balance sheet is, etc. In short, I think the vetting processes for both value and growth investing are the same and depend on the same, green eye shade work.

Where the two approaches do differ, though, is in downside risks. Growth investors tend to be overly optimistic that present unrealistic conditions will continue. Value investors, OTOH, as Graham hammered home in his classic intro, tend to worry about their downsides and are less likely to get themselves into trouble.

Additionally, depending on whose historical review you trust, 'value investing' --as an approach-- has out-performed 'growth investing', even though it is currently out of favor. But what really matters isn't the specific approach but consistency, discipline, and the willingness to do the needed work and to properly manage one's risks, no matter which betting scheme is chosen.

Arindam
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