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					                                              INVESTING
                       Growth stocks vs. value stocks: What’s the difference?



W            all Street is divided into two camps. Whether the average investor should go for growth stocks
             or value stocks is said to be one of the oldest debates in the financial market. Growth stocks
             and value stocks are bought and sold in the same manner. The two do not differ in terms of
             how much ownership they represent in a company. They differ mainly in how they are
perceived by the market and investors.
Growth stocks are associated with successful, high-quality companies that are expected to achieve above-
average earnings – at least 15 percent annually – relative to the overall market. They are highly valued by
some investors who are willing to pay more than their fundamentals would warrant. They tend to have a
high price-to-earnings (P/E) ratio, which is the share price divided by annual earnings per share. Growth
stocks typically pay little or nothing in dividends, because the earnings are reinvested in future capital
projects that will further boost the company’s profitability. Instead, growth stock investors receive returns
from future capital appreciation, the difference between the original amount paid for a stock and its current
value.
In contrast, value stocks are considered to be undervalued by the stock market. They are associated with
more mature companies that pay good dividends and have substantial cash on their books. Investors who
buy value stocks are betting that they will increase in value as other investors recognize their potential for
growth and start buying them as well. Investors believe they can make more money from buying value
stocks at bargain prices before their value takes off than from growth stocks whose increase in value is
limited. Warren Buffett, for example, is generally considered a value investor.
In terms of performance, growth stocks may outperform value stocks during bull markets. Value stocks
tend to shine when the economy contracts, as mature companies stand to benefit at the end of a recession
due to less competition. Historically, value stocks have done better than growth stocks because they tend to
cost less and grow steadily but slowly – assuming the companies survive and thrive. Meanwhile, growth
stock investors are betting that the companies’ growth will keep accelerating. They are willing to pay the
higher price with the hope that these companies will deliver on their promise of higher earnings. All this
highlights the importance of diversification. A portfolio that mixes growth stocks with value stocks is less
susceptible to negative market developments.

                        Common vs. preferred stock: What’s the difference?



W             all Street experts are saying there are incredible bargains right now in the stock markets. This is
              a good time to buy,” said Jay Leno. “Oh, it’s a great time to buy. Like kind of after a huge car
              crash, there are auto parts lying all around.” But seriously, some investors do think that now is
the right time to buy certain stocks. However, there’s more to playing the stock market than knowing which
company stocks to purchase and when to sell. Inexperienced investors should take the time to learn the ins
and outs of the equity market before beginning. One thing to consider is whether to purchase common or
preferred stock. They are the two classes of stocks that are sold by companies. Each is subject to different
financial terms.
Common stocks are securities representing equity ownership in a corporation. Owning them usually gives
investors voting rights (voting shares) in influencing the corporation’s objectives and policies, determining
stock splits and electing the company’s board of directors. One share of common stock is usually equal to
one vote. Common stock shareholders are entitled to a share of the company’s gains through dividends and
capital appreciation. Capital appreciation occurs when a common stock’s value increases and investors
make a profit when they sell the stock at its higher market value. Dividends are paid from a company’s
retained or current earnings typically on a quarterly basis. This payment is not guaranteed, but rather is
linked to the market like the price of common stock. But if the company tanks and is liquidated, common
stock investors can claim rights to its assets only after bondholders, other debt holders and preferred
stockholders have been paid.
Preferred, like common stocks, represent partial ownership in a company. But preferred stock shareholders
do not have any of the voting rights in the business available to common stockholders. Companies that
want to separate their investors’ economic interests from the actual governance of the business usually
favor preferred stock. Preferred stocks pay fixed dividends that do not fluctuate with the performance of
the company. The downside is that the company is not obligated to pay these dividends if it doesn’t have
sufficient financial resources. The main advantage of owning preferred stock over common stock is that
investors have a greater claim on the company’s assets in the event the company is liquidated .
                                           TAX AND LEGAL
                             Rx for a tax ache: Deducting medical expenses




M
               edical expenses can be claimed as itemized deductions on a federal individual income tax
               return if they meet the criteria set by the Internal Revenue Service. The IRS provides a general
               definition of medical expenses and the criteria to be followed in determining whether an
               expense qualifies as a medical expense in its Publication 502, Medical and Dental Expenses.
The general IRS definition states, “Medical expenses are the costs of diagnosis, cure, mitigation, treatment,
or prevention of disease and the costs for treatments affecting any part or function of the body.” Medical
expenses include fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists and
Christian Science practitioners. The costs of equipment, supplies and diagnostic devices needed for
qualified medical care services are also tax-deductible medical expenses.
Premiums paid for insurance that covers the expenses of medical care, limited amounts paid for any
qualified long-term care insurance contract and amounts paid for qualified long-term care services are tax-
deductible. The cost of transportation to get medical care as well as meals and lodging charged by the
hospital, if the main reason for being there is to receive medical care, are includable. Dental expenses are
also specifically included as medical expenses.
Among other medical treatment and service expenses includable are:
      Acupuncture
      Alcoholism
      Ambulance
      Artificial teeth and limbs
      Body scan
      Breast reconstruction surgery following a mastectomy for cancer
      Birth control pills
      Braille books and magazines
Capital expenses for special equipment installed in a home or constructions for home improvements to
accommodate a person with a disabled condition are considered medical care.
Expenses that are merely beneficial to general health are not. These include vitamins, over-the-counter
medicines, toothpaste, toothbrushes, toiletries, cosmetics, a trip or program for the general improvement of
health and most cosmetic surgery.
Because there is some room for interpretation, it is important to evaluate each situation individually to see
whether the expenses fall under this tax benefit provision. For instance, payments for a smoking-cessation
program and for drugs prescribed to alleviate nicotine withdrawal are tax-deductible. The costs of nicotine
gum and nicotine patches, which do not require a prescription, are not.

If you want additional information on the topics discussed in this newsletter please call Great Lakes
Investment Advisors at 800-801-0091 and Jason or Carl can help you.



Best Wishes,
Carl                                             Jason
Carl Cryderman                                   Jason F. Cryderman
Investment Advisor                               Investment Advisor



The legal and tax information contained in these articles is merely a summary of our understanding and interpretation
of some current provisions of tax law and is not exhaustive. Consult your legal or tax advisor for advice concerning
your particular circumstances.
Great Lakes Investment Advisor, Inc.
314 Eastman Ave
Midland, MI 48640
1-800-801-0091




                      For more information visit
              www.gradientgivesback.com/cryderman
              or call Great Lakes Investment Advisors
                            800-801-0091


“Financial Freedom is the ability to live comfortably without the fear of losing the lifestyle
                   that you worked so hard to achieve!” Anonymous

                                Also Check out our website at
                         www.greatlakesinvestmentadvisors.com

				
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