Don't Expect Any Smart Investing Investment Approach to work ALL THE TIME

Experienced investment managers know it is critical that they adhere to their chosen investment approach - and by doing so, they are sure to encounter times that severely test their investment abilities.

While investment management philosophies differ in many ways, nearly every approach is a variation on one of the two fundamental investment "styles" - growth investing and value investing. Each smart investing style has its pluses and minuses.

Investing smart with growth investment managers

Growth investment managers focus on companies with superior prospects for earnings and expansions.

Growth smart investing are often in exciting, innovative companies with leadership positions in their markets - companies whose stocks can soar if conditions are right. The problem is recognized growth stocks typically are priced at a premium and can quickly drop in value if they don't meet the stock market 's high investment expectations. So, its not surprising growth investment managers make big capital gains when they do well, but also sustain big investment drops during difficult times.

Investing smart with value investment managers

Value investment managers, in contrast, favor companies that are selling below their intrinsic worth.

Value smart investing may be investing in companies that are in a temporary slump, possess hidden assets or are in mature industries unappreciated by Wall Street. Value investing can offer the advantage of limited downside risk; some value stocks are priced low enough that they are unlikely to sustain a sharp decline, even if the overall market drops. The disadvantage is the investor may have to wait a seemingly interminable period of time for the market to recognize that value.

Click here to read more about value investing and growth investing.