Different Styles of Investing

You will find Investors usually classify themselves into different categories like Value, Growth, Income, Small-Cap and International. But very rarely will investor classify themselves as short term investors. Almost everyone thinks of themselves as long term investors, even those that check share prices on their cell phones and have ticker symbols on their desktop never admit to being short term investors. Many people do not fall into any one category but draw from different categories to produce a diversified portfolio.

Value Investing
Investors that seek companies that have fallen below what they determine to be the real value or “intrinsic value” of the company. Since the stocks of the companies are selling at a depressed price, they are said to carry a “margin of safety”. Warren Buffett is probably the most famous value investor.

Growth Investing
Investors that invest in fast growing companies with a prospect for fast growth are usually growth investors. It is a much bumpier ride and this kind of investing is not for the faint of heart.

Income Investing
Income Investors usually invest in companies that pay dividend. Most of these companies are well established and have solid balance sheets.

Small-Cap Investing
Small cap investors invest in companies that have a small capitalization and relatively less known than the bigger companies. Since most of the companies are less followed by Wall Street analysts, the potential upside can be very substantial, but it comes with a lot more risk.

International Investing
International investors invest in companies listed outside the United States. More than half the world’s capitalization lies outside the United States.