What are some reliable investment strategies?

On August 22, 2025, many investors’ accounts were likely glowing red! ・The Shanghai Composite Index broke above 3,800 points—its highest level in ten years; ・Technology stocks surged continuously, with the STAR 50 Index jumping over 8% in a single day; ・AI, computing power, and semiconductor stocks triggered a wave of daily trading limits (‘limit-ups’); ・Market sentiment reached fever pitch! But! The more exuberant the market, the more vigilant we must be. Chasing momentum blindly at this stage often leads to buying near short-term peaks—and getting stuck there. Rather than riding emotional waves, it’s wiser to calmly study time-tested investment strategies. Following our previous article on the Dividend Strategy, this piece introduces the GARP Strategy! I. What is the GARP Strategy? GARP stands for “Growth at a Reasonable Price.” Literally translated, it means “growth at a reasonable price.” Its core principle is: To seek both growth potential *and* reasonable valuation. In other words, it strikes a balance between growth-oriented and value-oriented styles: ・It captures the upside from earnings growth of growth stocks; ・It mitigates downside risk through the relatively low valuations typical of value stocks. Examples: ・Pure growth stocks: P/E ratios consistently above 30x; ・Pure value stocks: P/E ratios persistently below 30x; ・GARP candidates: P/E ratios between 20x–30x, coupled with stable earnings growth. II. Key Metrics Monitored by the GARP Strategy 1. Net Profit Growth Rate (G) The GARP strategy prioritizes growth, so it places strong emphasis on companies’ net profit growth rates. Companies with long-term, modest growth—e.g., banks, real estate firms, or utilities—with annual earnings growth hovering around 10% are rarely selected under GARP; they better suit the Dividend Strategy. Conversely, firms growing faster than 50% annually are also seldom considered, as few can sustain such explosive growth over the long term. Instead, GARP favors safe, realistic, and sustainable growth—typically in the 20%–30% range. Many outstanding companies maintain steady growth within this band over extended periods, eventually evolving into mega-bullish stocks. 2. Price-to-Earnings Ratio (P/E) P/E is the most widely used and intuitive valuation metric in equity investing. It is calculated as: P/E = Stock Price / Earnings Per Share (EPS) That is, how much you pay to acquire ¥1 of the company’s earnings. Example: Suppose a company’s share price is ¥20 and its EPS is ¥2. Then: P/E = 20 / 2 = 10 This means, at current earnings levels, it would take 10 years to recoup your investment. The essence of GARP is buying growth potential at a *not-too-expensive* price. Growth potential is assessed via net profit growth rate; “not too expensive” is evaluated using the P/E ratio. Thus, GARP generally requires P/E ratios that are not excessively high—typically below the market average, i.e., under 30x. 3. PEG Ratio (P/E ÷ G) The PEG ratio is the metric GARP investors prioritize most—and was popularized by legendary investor Peter Lynch. Its formula is: PEG = P/E Ratio ÷ Net Profit Growth Rate This metric simultaneously incorporates both valuation (price) and growth potential.

Financial Literacy Advancement 08: A Comprehensive Comparison of Three Investment Strategies—Shield, Sword, and Spear

In the previous three articles, we separately introduced the characteristics, performance cycles, and suitable investment targets of the Dividend Strategy, the GARP Strategy, and the High-Prosperity Strategy. This article provides a summary-level comparison to help you understand each strategy’s positioning and complementary roles—enabling smarter asset allocation. I. Positioning of the Three Strategies ・Dividend Strategy = Sturdy Shield Defensive in nature, relying on dividends and stable cash flows; yet it also exhibits relatively strong offensive capability near the end of bear markets. ・GARP Strategy = Long Sword Buying high-growth assets at reasonable prices—balanced between offense and defense. ・High-Prosperity Strategy = Long Spear Pursuing high elasticity and high growth—purely offensive. II. Core Metric Comparison Across the Three Strategies Strategy Key Metrics Representative Sectors / Instruments Investment Horizon Characteristics Dividend Strategy Dividend Yield, ROE, Dividend Stability Banks, Coal, Steel, CSI Dividend Index Bear Markets, Defensive Phases Stable cash flow, downside resilience GARP Strategy P/E 30%, Industry Prosperity, Tech Waves New Energy, Semiconductors, AI, ChiNext / STAR 50 Industry Cycle Boom Phases High Risk, High Return III. Rotation Patterns Among Strategies No single strategy dominates across all market phases. Within any given market cycle, different stages are driven by distinct logics. By timely adjusting our investment strategy according to each strategy’s characteristic performance cycle, we can theoretically improve our odds of success in equity investing—and achieve higher long-term excess returns. 1. Early Decline → Dividend Resilience Generally, during the initial phase of a market downturn, the Dividend Strategy tends to outperform. At economic peaks, the dividend-yield factor helps screen for many cyclical stocks—and cyclical stocks often exhibit lagged declines when markets first turn downward. That is, the Dividend Strategy typically reaches its peak *later* than the CSI 300 Index (see Figure 2). So, when we know the market is overvalued and the cycle is nearing exhaustion—but remain uncertain whether the top has truly formed—we can shift allocations toward the Dividend Strategy to help absorb the market’s ‘first blow.’ For example, comparing the CSI Dividend Index and the CSI 300 Index (as shown in the chart above), we see the CSI 300 underwent a sharp correction early in 2021, while the Dividend Index peaked only at year-end—giving us ample time to exit near the top. Moreover, during the subsequent downtrend from 2022 to 2024, the Dividend Strategy held up remarkably well—trading sideways or even trending slowly upward. 2. Mid-Decline → Defense First Warren Buffett once said the two rules of making money in the stock market are: (1) Never lose money. (2) Never forget Rule No. 1. Many may think the second rule is tautological—just common sense! In fact, it underscores the paramount importance of defense: losing 50% requires a 100% gain just to break even. Even though the Dividend Strategy offers relative resilience, it still suffers meaningful drawdowns during severe bear markets—for instance, before September 24, 2024, the Dividend Strategy experienced a substantial decline. Under such conditions, we should reduce equity exposure and increase allocations to bonds for defensive purposes.

Oil-Dri Corp of America (NYSE:ODC): A GARP Approach to Growth at a Reasonable Price

Oct 6, 2026

Oil-Dri Corp of America is highlighted as a 'Growth at a Reasonable Price' investment candidate due to strong EPS growth and healthy financial ratios, despite mixed valuation ratings.

ChartMill

2026-03-25

Oil Dri declares $0.205 dividend

2026-03-25

Oil-Dri Q1 Earnings Decline Year-Over-Year Amid Tough Comparison Pressures

2026-04-03

Oil-Dri Updates Deferred Compensation Plan and Restricted Stock Agreements

2026-04-03

Oil-Dri Corporation of America Insiders Dispose Stock Amid Bearish Signals

2026-04-04

Oil-Dri Corporation Share Price Crosses Above 200-Day Moving Average