und managers are often categorised as either value or growth specialists. Both approaches have merits and pitfalls.

The value investor assesses the worth of a company's assets and invests on the basis that the share price understates the total. In an efficient market, the real worth is soon recognised. But markets are not efficient. Cheap-looking assets have a tendency to get cheaper in deteriorating markets or under bad management.

The growth investor assesses the worth of a company's expected future performance and invests on the basis that the share price understates the potential. The risk here is over-optimism. If there are no other measurement criteria, the downside can be painful.

In practice, value and growth strategies need not be mutually exclusive. Different styles will suit different circumstances. What is important is to find prices that understate the potential, whether of value or growth, and to understand the means by which the broader investment community will come to share a positive perception.