The conundrum of value vs growth

Howard Marks is the co-founder and H co-chairman of Oaktree Capital Management, the largest investor in distressed securities worldwide. He has more than 50 years of investing experience. His 'memos' are a great source of learning for any investor.

- HOWARD MARKS

His 'memos' are a great source of learning for any investor. Here we have presented six insights (through several excerpts) from a memo where he details his numerous conversations with his son (who is what most people would call a 'growth investor') about the clash between value and growth investing. The memo can be accessed at https://bit.ly/3PyjuIY.

This is one of the best memos written by Howard in the past few years. After reading it, your understanding of investing, in general, and value investing, in particular, will enhance multi-fold.

1 THE DIVISION BETWEEN VALUE AND GROWTH INVESTING IS WRONG

My belief,... ..., is that the two should never have been viewed as mutually exclusive, to begin with.

Value can be found in many forms. The fact that a company grows rapidly, relies on intangibles such as technology for its success and/or has a high p/e ratio shouldn't mean it can't be invested in on the basis of intrinsic value.

The fact that a security carries high valuation metrics doesn't mean it's overpriced, and the fact that another has low valuation metrics doesn't mean it's a bargain.

2 WHAT VALUE INVESTING SHOULD BE