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Speaker 1: Welcome to Ask Fear and Greed, where we take your

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Speaker 1: questions and do our best to answer them. I'm Michael Thompson,

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Speaker 1: and good afternoon, Sean Al.

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Speaker 2: Good afternoon, Michael, Sean.

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Speaker 1: Today's question comes from Chantelle and she's shared it by Instagram.

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Speaker 1: There are obviously multiple ways you can do it by

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Speaker 1: Instagram or LinkedIn or Facebook, or just go to our

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Speaker 1: website Fear and Greed dot com today you will do

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Speaker 1: it that way, but Chantelle has chosen Instagram. Great choice,

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Speaker 1: and she says, can you decode some of the jargon

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Speaker 1: that I hear all the time? I mean that really

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Speaker 1: kind of feels like our job, isn't it. It's ye

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Speaker 1: what we've put on this earth to do. What's the

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Speaker 1: difference that might be overreaching a little bit there, Sean,

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Speaker 1: a little go on. What is the difference between growth

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Speaker 1: stocks and value stocks?

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Speaker 2: Yes, good question. So growth stocks are companies that are

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Speaker 2: considered to have a potential to outperform the overall market

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Speaker 2: over a longer time period. It's kind of like they've

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Speaker 2: got a lot of future potential for growth is what

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Speaker 2: we're investing there. Value stocks are companies that are trading

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Speaker 2: below what they're really worth. I suppose that's that's kind

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Speaker 2: of the way to think of it, and as a result,

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Speaker 2: they will provide a superior return in the future. Now

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Speaker 2: people always talk about value versus growth. It's not always

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Speaker 2: not every stock is always a growth stock or always

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Speaker 2: a value stock. So the big growth stocks of recent

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Speaker 2: times have been the tech companies in the US. They're

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Speaker 2: always considered. You have the kind of the good ones

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Speaker 2: healthcare stocks as well. If you think of value stocks,

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Speaker 2: you might think of consumer discretionary stocks in Australia. So

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Speaker 2: Dominate's Pizza, you might say that is a great value

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Speaker 2: stock because what it's trading at now based on its profitability,

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Speaker 2: is way below what it has done previously, So there's

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Speaker 2: value in that stock. So they talk about a thing

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Speaker 2: called price to earnings ratio, and that's what's training on

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Speaker 2: compared to profits. And typically value stocks have lower price

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Speaker 2: to earnings ratios than growth stocks. Typically value stocks are

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Speaker 2: kind of considered underpriced, whereas growth stocks are more of

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Speaker 2: richly priced. Often the value stocks play higher dividends, whereas

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Speaker 2: the growth stocks invest the money, tend to invest the

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Speaker 2: money in building the business those sorts of things.

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Speaker 1: And do certain kind of economic conditions benefit growth stocks

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Speaker 1: or value stock. So say, for instance, with interest rates higher,

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Speaker 1: is that going to be kind of better for growth

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Speaker 1: stocks or better for value stocks or can you not

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Speaker 1: really make a sweeping statement like that.

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Speaker 2: You can't make a sweeping statement like that. So value

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Speaker 2: stocks are often known as well. Some value stocks are

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Speaker 2: cyclical stocks, so stocks that do well in strong economic

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Speaker 2: conditions and do poorly in other economic conditions. Growth stocks

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Speaker 2: tend to do well when interest rates are lower. Having

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Speaker 2: said that, is interest rates rose, you know, the end

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Speaker 2: videos of the world did incredibly well, so you sort

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Speaker 2: of have to throw that out the window a bit.

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Speaker 2: It's not you can't really broadly say, you know, good

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Speaker 2: times are better for value stocks or worse for growth stocks.

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Speaker 2: You really have to look at individual companies, and you know,

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Speaker 2: I'm trying to answer a question broadly. Economic downturns, you

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Speaker 2: might actually go for a value stock because it'll be underpriced.

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Speaker 2: So the future is promising.

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Speaker 1: But just like anything, you need to take into account

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Speaker 1: a whole stack of other factors, like because you mentioned

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Speaker 1: obviously kind of in video, and at the same time

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Speaker 1: we had AI and the demand for AI products booming,

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Speaker 1: which of course had a greater impact on in video

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Speaker 1: than any kind of interesting movements.

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Speaker 2: Yeah, and one of the truth of the matter is

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Speaker 2: that often more mature companies are seen as can be

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Speaker 2: value stocks, whereas growth stocks are often young or rapidly

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Speaker 2: expanding companys. So healthcare and tech are a good example

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Speaker 2: of that.

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Speaker 1: Look, you know what, again, it is high risk marking

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Speaker 1: our own homework.

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Speaker 2: But I'm going to go right ahead and go right ahead.

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Speaker 1: I'm going to give us conservatively an A plus.

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Speaker 2: Ah really, yeah, I.

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Speaker 1: Reckon, We've done a great job.

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Speaker 2: But what I shouldn't what I shouldn't concede at this

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Speaker 2: point is that value and growth is sort of a

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Speaker 2: concept that's been around forever, and you know, on one

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Speaker 2: day a stock can be a growth stock. You know,

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Speaker 2: in three months time, suddenly someone's talking about as a

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Speaker 2: value stock. And so it is a very gray line

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Speaker 2: between the two.

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Speaker 1: And of course we are not an investing podcast, and

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Speaker 1: we are not You may have gathered that over the

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Speaker 1: last four and a half minutes, but you should seek

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Speaker 1: professional advice before making investment decisions. But chantell I do

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Speaker 1: hope that we have answered your question. And maybe a

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Speaker 1: plus was a little bit kind of optimistic. Maybe it's

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Speaker 1: just a straight A.

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Speaker 2: Yeah, I'll take an A. I'll take a B plus

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Speaker 2: to be honest, but.

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Speaker 1: All right, no, I don't really go below an A.

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Speaker 1: Thank you very much Chantell for the question, and thank

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Speaker 1: you Sean for answering it.

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Speaker 2: Thank you Michael, Thank you Chantell.

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Speaker 1: Remember if you've got something that you would like to know,

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Speaker 1: then please send your question through on LinkedIn, Instagram, Facebook,

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Speaker 1: or at Fear and Greed dot com dot au. I'm

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Speaker 1: Michael Thompson and this is ask Fear and Greed