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Growth Stocks to better increase your retirement plans!

In Proverbs 12:15 the Bible says "the way ofto use the facts and figures from Galvin and
a fool seems right to him, but a wise manCarter's research because it is more recent
listens to advice." This verse, along with(2006).
several others, helps me to realize that
shifting some of my clients' assets intoThe  Facts
growth stocks would be a wise idea for now.
Many of you probably noticed changes in yourFrom a cyclical perspective, growth shares
portfolios, particularly in your US stockare priced at nearly a 40% discount to their
asset class. The changes I made were to addlonger-term relationship against value
growth stocks as well as large-cap stocks tostocks. The four year duration of value out
your holdings. So now you have a more trulyperformance is matched only by the period
diversified holding of US stocks than you didfrom 1973-1976. The money that is allocated
before  these  changes  took  place.to growth mutual funds currently stands at
the lowest percentage of total equity assets
So why did I decide to add growth stocks toon record. The price to sales and the
your portfolios after avoiding them for manyprice-to-earnings ratios for growth and value
years. There are many reasons why I decidedstocks are starting to become more and more
to make this change and I could show youeven. The premium historically placed on
literally pages full of graphs that supportfuture revenues created by growth stocks
the future probability of a nice come back bywould be labeled as a "value". Another area
growth stocks. In this edition of Thethat continues to concern me about value
Entrusted Steward I'm going to touch on juststocks, as a sector, is that financial stocks
a  few.which make up roughly one third of all value
stocks are starting to experience poor
First let us define exactly what growthperformance because of increases in interest
stocks are compared to value stocks. Growthrates. These same interest rate increases are
stocks typically have higher price to bookcausing crude oil price stabilization or a
ratios, forecasted earnings growth rate, andpossible decrease and this is going to help
price-to-earnings ratios than value stocks.tech stocks, in my opinion. Technology stocks
They also generally pay little or nomake up roughly one third of most growth
dividends where as value stocks pay higherindexes. Over the past two years technology
dividends. This is a very basic definition ofstocks have performed opposite to energy
what a growth stock is compared to the valuestocks.
stock. Why are growth stocks valued higher
than value stocks? The reason is that valueI've picked two of the most convincing
stocks are seen to be out of favor comparedgraphs, to me, for at least moving a portion
to growth stocks. Also, growth stocks areof your portfolio into growth stocks from
anticipated or forecasted to have bettervalue. I have always liked value stocks
earnings  and  revenue  than  value  stocks.because during bear markets they do not go
down as much as growth stocks and that is why
Much of the information in this newsletterI'll always have a portion of value stocks in
comes from research of growth stocks in ayour portfolios (for those with appropriate
recent white paper written by Tom Galvin andrisk and goals). To summarize many of the
Rich Carter with US trust institutionalgraphs not pictured here in this newsletter,
titled, "The Return of Growth Stockgrowth stocks became tremendously overpriced
Investing." A year ago, I read a similarin 2000 and since then have become a good
article by Ben Inker of GMO Investmentsbuy.
titled, "The Problem with Value." I decided



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