If you are a brand new investor you should build up a strong foundation of index funds.
But then once you have tens of thousands of dollars in index funds I believe that a person should venture out and start picking growth stocks.
Because you need to scare your portfolio.
Let’s talk about the different between growth and value. Warren Buffett is the king of value. He made it really popular for investors to pick stocks that were priced less than their intrinsic value. Then the investor holds that stocks for a lifetime in the hope that the market will realize the error of its ways and correct the price up to the stocks true value.
The problem is that you, the average investor, are not Warren Buffett. You do not own a massive insurance, railroad, candy business. And you do not have millions or billions to invest.
This is where growth comes in. Buffett is the most talented investor, but he missed a lot of great opportunities. Particularly technology: Apple, Microsoft and Amazon. He did not understand these businesses and they grew very quickly.
Lots of tech companies grow quickly. And they do not pay dividends.
Value investors love dividends.
My personal goal right now is to scale my portfolio. The way you go about that is to pick businesses that are smaller today, but growing fast. They are the businesses that want to one day become Walmart and Amazon.
These businesses usually do not pay dividends and instead are focused on growth.
A business can be both growth and value. A good example is Disney. Classic Americana, but also offering Disney+, Star Wars and Marvel.
The 4 stocks that I am buying heavy for all of 2021 are:
2020 was a devastating year and many businesses took a major hit like Berkshire. But then some businesses are so ingrained in society that they can survive almost anything.
Facebook and Alibaba have so many users that they will grow no matter what. Over 3 billion users worldwide and counting. There is any number of ways that these businesses can monetize their platforms. And these 2 business are cheaper than Google, Apple, Microsoft and Amazon. I wholeheartedly believe these are Trillion dollar companies in the making.
Berkshire Hathaway is sitting on more cash than any other business in the world.
Mercado Libre. One of the newest businesses on the scene. They remind me of Alibaba a lot. But instead of China they operate mostly in South American countries. They have already proven that they can be in multiple countries.
I like these business because they are big. They have the management and workforce needed to scale on a global level, but they are still innovating and have not saturated the market with their products.
I still put money into index funds, but these are my core growth stocks for 2021.
Stay tuned for my portfolio of smaller growth stocks I believe in.
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