Recently, with the rise in interest rates, there has been talk that it is now time to increase the weight of value stocks. However, in the long run, whether it's growth stocks or value stocks, it doesn't really matter.

Will truly great investors earn with growth stocks and lose with value stocks? Everyone has their own style, but true masters don't blame their tools.In fact, there are 3 issues that are more important than style when it comes to stock selection: 1) Good companies, 2) Good stocks, and 3) Buying at a good price. What is the hidden meaning behind this seemingly obvious question?

1) Good companies - Ultimately, it's Growth.

A good company, simply put, is a company that grows. And in a sustainable way. So, are non-growing companies not attractive? Of course. Where does the value of a company come from? From the company's profits. So what needs to happen for profits to keep increasing? Sales need to increase or margins need to increase. To gauge how sales can increase or margins can improve, we look at technology, capital, network, customer loyalty, competitors, and so on.

The capitalist environment we live in is always an inflationary environment, except in extremely unusual cases like the Great Depression. This means that the value of nominal currency naturally decreases over time, not the other way around. What about the sales and profits that companies earn? Of course it's a nominal value. Therefore, companies that fail to grow cannot protect their value from inflation. Protect your value from inflation? Where have we heard that before? We invested in stocks to protect our assets from inflation, but the company we invested in isn't growing? That defeats the purpose of investing.

However, there are occasional cases where there is investment attractiveness even though the company is not growing. This comes from the asset value, which is the result of the company's past performance, but in this case, two conditions must be met. 1) The time of realization of asset value must come in the foreseeable future, and 2) The distribution of asset value when it is realized must be fair to all shareholders. How do you know about number 2? There needs to be a good Management, which will be discussed in the Good Stock section later.

2) Good stocks - Ultimately, it's Management.

Some investors might think that this is the same as number 1. However, sadly, there are cases where a company is good but the stock is not. This is quite common in the Korean stock market. The reason? Because the Management is bad. In what way? In the way that they do not respect the value of minority shareholders.

We've all heard that buying a stock makes us the owner of the company, so we should look at it with the same mindset as a business owner and invest. But this only applies if the business partner we trust to invest in is a good person. We've all heard stories of successful entrepreneurs who lost a large fortune overnight and went bankrupt due to the betrayal of a business partner they trusted. It may seem like this only happens when you're running a business, but it's the same with stock investing.It is important to remember that becoming a minority shareholder means trusting the majority shareholder with your money.

3) Good price - Ultimately, it's Valuation. But it's the hardest part. 

This is probably the easiest part to understand.What is a good price? The cheaper you buy, the better. But the problem is? If you keep waiting, you're more likely to just end up twiddling your thumbs. In fact, valuation is one of the biggest challenges for individual investors. Valuation is always a challenge for institutional investors who make a living out of thinking about it every day.And in most cases, the answer isn't something I decide on, it's something that's given by the market, so individual investors should be more flexible in their approach rather than setting too strict of a standard.

I'm going to buy at 10x P/E on this year's earnings and sell at 15x P/E on next year's earnings. Therefore, the purchase price is this much and the sale price is this much. This plan may seem perfect at first glance, but in reality, it's very difficult to do. Especially matching this year's earnings and next year's earnings is no easy feat, but trying to match the upper and lower bounds of valuation is even harder. Everyone is struggling with this, so the common benchmarks are 1) past figures or 2) competitor figures. If you use 1) the past average, it doesn't mean anything if the standard deviation is large because you don't know what cycle you're investing in, and 2) in the case of competitor figures, if I go bankrupt, my competitors go bankrupt too, and if I do well, my competitors do well too, so it's hard to consider it an independent variable. So, the bottom line is? Valuation is inherently difficult, so don't be too picky.