Value and growth at home and abroad

Which stocks to invest in has always been a contentious issue. However, in the study of finance, there are ways in which firms can be categorized based on whether they have high growth prospects (such as Afterpay) or offer long-term value (like some of the mining companies and banks). Sometimes a mix of both provide the best optimal outcome for investors but a lot more research needs to go into this area.

In particular, when you also consider the possibility of investing some of your money abroad, a complex decision-making process needs to take place to work out what would be the optimal mix of domestic and foreign stocks to hold relative to the proportion of growth versus value stocks in the portfolio. Statistical analysis and Monte Carlo simulations can provide answers to these questions and this is an ongoing pursuit in the area of asset pricing in finance.

If this area of research is on interest to you, you may consider undertaking an Honours project on this topic. Contact Dean Wilkie to have a discussion.