What is the winning stock portfolio for investors?

Yes, it is very crucial for stock market investors to know what the winning stock portfolio is. Generally there are two investments strategy followed by the stock market investors. One is growth and another is value investing.

Growth stocks are the stocks that usually have above-average prospects for long term growth based on measures like dividends, earnings and book value. Growth stocks are high priced but their prices appreciate in the future ensuring the investors that they get their reward. However, growth stocks yield lesser dividends.

On the other hand value stocks are low priced in relation to their earnings, dividends and book value, but they yield above-average dividend income.

Let us assume that Mr. X belongs to the group of growth investors who look for stocks that outperformed the growth rate of the overall market. Growth stocks are more volatile in nature and focus on capital appreciation. Stock market investors like Mr. X consider that a company's present earnings are not as important as the expected growth of those earnings.

Another group of investors like Mr. Y are value investors who seek to buy valuable assets at sale prices. Value stocks have the tendency to lag the overall stock market during market upswings and to outperform it during market declines. Value stocks are more stable in nature as they give more dividend income because many companies pay dividends even when stock prices are declining. Value investors like Mr. Y are concerned to identify stocks that are trading at lower prices than their actual prices and do not bother about the expected future growth of the company.

It is advisable to achieve the right mix of growth and value stocks either by combining growth and value oriented mutual funds or by identifying a fund that already includes the two types of investments. Growth stocks yield capital gains, which receive preferred tax treatment whereas value stocks give the investors more downside protection.

by Nisha Acharya ,a blogger who frequently writes on various topics.