Terry Smith: Why We Avoid Traditional Value Investing
In his book – Investing for Growth, Terry Smith contrasts his investment approach with traditional value investing, noting that while value investing can offer returns when stocks are undervalued, it requires active buying and selling and incurs higher transaction costs.
Smith’s strategy focuses on companies with high, predictable returns on capital that can reinvest profits to fuel growth and compound value over time.
Unlike value investors who wait for intrinsic value to be realized in the share price, Smith seeks quality businesses that compound value organically, allowing for long-term holding with minimal trading. He argues this “buy and hold” approach is ultimately more efficient and profitable.
Here’s an…
