◈ GLOSSARY · INVESTING
Growth Investing.
A definition, in plain English — with the books that teach it.
ClearValue Books · reviewed against sources ·
◈ DEFINITION
What it means
Definition
Growth investing focuses on companies expected to grow revenues and earnings significantly faster than the market average, even if the stock looks expensive on traditional metrics. The bet is that future earnings will catch up to and exceed today's price. The risk is paying for growth that doesn't show up.
◈ IN PRACTICE
Example
A software company growing revenue 30% per year might trade at 50x earnings while the market trades at 20x. A growth investor pays the premium betting the company will keep compounding; if growth slows to 10%, the multiple usually compresses and the stock can fall hard even if the business is still healthy.
◈ RECOMMENDED READING
