What is Growth Investing?

Growth investing can be referred to as a style of investment strategy which is focused on the appreciation of capital. Anyone following these investing strategies is known as a growth investor. The investing strategies of growth investing involve that managers will invest in companies that are projected to witness above-average growth as indicated in their earnings, revenues, or cash flow.

This kind of investing money 101 offers manager an opportunity to take a careful look at the methods used by the company in its business managements. For example, in the stock market today, several growth-oriented organizations are known to reinvest their profits in the expansion of the organization, compared to paying shareholders their dividends using this profit.

Due to the work of Thomas Rowe Price, in defining and promoting growth investing via his company T. Rowe Price, he is usually referred to as “the father of growth investing.

 Characteristics of Growth Investing
Some characteristics of growth investing include:

  • Growth investing focuses on companies which have above-average growth rates both in sales and earnings.
  • In the stock market today, the stocks bought during growth investing tend to have above-market price-to-sales and price-to-earnings ratios.
  • The fast growing earnings and sales justify an above average estimation.

 Benefits of Growth Investing
Some of the benefits of growth investing includes:

  • Fast Appreciation

Successful investments often appreciate at a rapid rate, compared to the overall market. This is the main benefit of growth investing.

  • Attractive Companies

The investing strategies of growth investing are more focused on attractive companies that have above-average revenue and sales growth.

  • Exposure

Growth Investors gain exposure to pioneering industries which are rapidly developing and are good to take note of.

The stock market charts above help to make your investing easier by giving a better overview of what is happening in the market - It's an investing 101 with charts.  More charts will be add soon,

The McClellan Summation Index measures Net Advances and Declines of all stocks in the Index and is suited for major trends

  1. It gives a running cumulative total of daily breadth also known as the Daily Advance-Decline Line. 
  2. It is a long-term version of the McClellan Oscillator. 
  3. The McClellan Oscillator is a momentum oscillator that measures Net Advances and Declines and is more suited for shorter term trends.
  4. Here we are using it in comparison to the S&P 500.

Discretionary Stocks and Consumer Staples Stocks comparison

  1. During an up trend in the S&P 500 you can normally expect Discretionary Stocks (XLY) to outperform Consumer Staples Stocks (XLP).
  2.  When the S&P 500 is going up and the the XLY to XLP ratio is going down this maybe be used as a warning
  3.  COOR: is the correlation between the S&P 500 and the XLY/XLP ratio.   Anything above zero is a positive correlation.  The closer the the correlation gets to 1.00 the  stronger it becomes.
  • Discretionary are big ticket items like cars, refrigerators, that big new TV you want
  • Consumer Staples are goods that you buy everyday that you must have like  toothpaste, deodorant and soap. 

McClellan Summation Index/McClellan Oscillator

  1. When the green line (McClellan Summation Index) crosses above zero (blue line) the long term price trend of the gray line (SPDR Fund) is considered positive.
  2. When the McClellan Oscillator crosses above the zero line (turning black) this gives a short term positive reading and points to a possible buy in point in the  longer term up  trend.
  3. When the Volume McClellan Summation Index crosses above the zero line (turning black) this gives a positive reading.  Keep in mind that volume moves should precede price.

Putting the wind at your back

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Investment Sky

The fundamental rule for using the bullish percent index

  1. When the Bullish Percent Index (BPI) is above 70%, the market is overbought, and when the indicator is  below  30%, the market is  oversold.
  2. The bulls have the edge when the market is over 50%
  3.  The gray line (S&P 500) will follow the green line (S&P BPI) either upward or downward.