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In Global Investing, Seek Value, Not Growth

Why growth alone is meaningless.

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How often have you heard "economic growth" in relation to international investing? And how often have you heard "price" referenced in the same discussion? We suspect that instances of the former far outnumber the latter. This mismatch underscores a common but perilous fallacy: that economic growth drives investment returns.

As distinguished investor Jeremy Grantham pointed out in a recent video interview, the key question is not which economies will grow fastest, but which offer the greatest value. "It isn't about top-line growth," Grantham explained. "Stock market returns are overwhelmingly related to return on capital. Value matters in everything, including country selection."

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Ryan McLean does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.