Growth Stocks vs. Value Stocks: Which Should You Buy?

Growth Stocks vs. Value Stocks: Which Should You Buy?

For 90 years, growth stocks averaged an annual return of 12.6%, whereas value stocks returned an even more robust 17% per year.. Assuming a $100 investment in growth stocks and value stocks in 1926, the growth stock investment would have been worth about $4.4 million by 2015, while the value stock investment would be worth a whopping $137 million.. Additionally BofA/Merrill Lynch analysts note that growth stocks have historically performed best when the economy is growing slowly, whereas value stocks performed best when the U.S. economy was running on all cylinders.. As long as access to cheap capital persists, growth stocks may be standout investments relative to value stocks.. But over the very long run, the data pretty clearly favors value stocks , which have outperformed growth stocks in approximately three out of five years over the analyzed period.. Your choice to focus on growth or value really depends on whether you're in investing for the next five to 10 years, or perhaps the next 30 to 50 years.. For context, Bristol Myers has averaged a forward price-to-earnings ratio of 18 over the past five years.. You can't go wrong with growth stocks or value stocks -