Question

Four types risk portfolios are Big value, big growth, small value, small growth, Which of the risky portfolios should longer term investors bias their portfolios? Why?

Answer 1

The longer term investor should be trying to invest into to big growth companies because these companies are expected to grow in the long-term and acquired a larger growth in the market and this will be reflected into the market price as there will be larger growth, there will be larger valuation appreciation for these companies and investors will be gaining through increasing investment purpose by investing into these companies if he is wanting to invest for the longer period of time.

Big value are only providing upside to a certain limit and small value and small growth are low risk,low return kind of portfolio.