I keep confusing “growth” and “value” investing. How do I keep the two...

Growth stocks trade at high P/E and price-to-book ratios. When a stock is trading at 35 or 50 times the earnings, every earnings announcement can move the stock's price dramatically. A growth investor must have a long time horizon and the ability to withstand large fluctuations in the market price of the investments. A growth investor is not seeking dividend income.

Value investors buy stocks trading at low price-to-earnings and price-to-book ratios. A value investor often purchases stocks in out-of-favor corporations trading for less than they should be. For example, when the company’s CEO is testifying before Congress over badly handled recalls, many traders dump shares of the stock, while value investors might buy shares at currently depressed prices. 

Value stocks that pay dividends typically have high dividend yields. The board of directors does not usually cut or suspend the dividend paid to common stockholders, so the decreasing market price raises the yield. 

A value stock could trade at a low multiple for many reasons. It could be the company has recently stumbled, or has lost the media buzz it once had, or that the industry sector is currently out of favor or in a period of contraction. In general, large, established companies trade at lower P/E ratios. Younger companies are associated with stock trading at high P/E ratios, as the future is a blank slate supported by a very short history of financial results and much conjecture.

The goal for both growth and value investors is the same. They both want the market price of their stock to rise. The difference is in the price points at which they make their purchases. Growth investors buy expensive stocks expected to rise even more in the future, while value investors buy stocks they are convinced are worth more than the market realizes. 

If the two groups invested in real estate, growth investors would buy new properties in the hot part of town, while value investors would favor fixer-uppers that can be rented for a few years and then sold at a profit.