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Thursday, July 26, 2007

GARP Stock Investing Strategy

GARP or Growth At a Reasonable Price is a hybrid stock market investing strategy which combines the merit of two most popular investing strategies named Growth Investing and Value Investing. The investors following GARP investing strategy looks for growth company stocks which are to some extent undervalued.

GARP stock investing strategy requires high degree of customization of trading platforms. GARP stock investors performs both growth and value analysis of each stock individually and concentrates those on middle region by avoiding extremes. The major areas of technical analysis include intrinsic worth, P/E ratio, book value, and assent to liability ratio. The typical growth rate for a GARP stock is between 10% and 20%, above and below percentages holds great risks.

GARP stock investing strategy holds both advantages of growth and value investing. But often it was noticed that the earnings of GARP investors differ considerably from that of strict growth or value investors. GARP investors face little challenges compared to growth investors in bearish markets. The major factor deciding the success of a GARP investor is his ability to make decisions, as GARP investors hardly get any support.

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