 Good day, fellow investors! Now, I like to consider myself a value investor, but then many ask the question, why am I talking about Chinese growth stocks, or global growth stocks, or why am I talking so much about growth when analyzing stocks? Because the main conception is that value investor would only look at boring bargain stocks. This is because there is a big misconception that growth is not part of value and that the two are separated. However, as what Buffett said, growth and value are joined at the hip, and therefore growth is an essential component of value investing. However, if you look at Bank of America, what are they saying? They are clearly separating growth and value. Similarly, fidelity also separating growth and value, because that's easier and makes things much more easier to sell to the public that wants to invest in passively managed, boring, long-term, loss-making investments. Mark my words. Letters to shareholders discusses how market commentators and investment managers refer to growth and value styles as contrasting approaches to investments are displaying their ignorance, not their sophistications. Growth is simply, as I said before, a component, usually a plus, but also something very important, sometimes a minus in the value equation. So we're going to see how to implement growth that creates value in our investment style and avoid growth that destroys value. As the best things in investing are simple, growth that creates value is also simple. If you have a business model that has a high return on capital that is doing well, that's easily replicable across the globe, then you have growth that creates value, because the business model is self-sustainable, you can reinvest the profits into new venues and grow. One example of such a company, Starbucks. Starbucks more than doubled its revenue in the last seven years. Its profits exploded and the stock price exploded too. Starbucks found a profitable business model, replicated it all around the world and created a huge success for shareholders. However, there is a company that's growing even faster than Starbucks and that is Blue Apron. Blue Apron has increased 10 times its revenues in the last three years, but also has increased 10 times its cash outflows, the cash burn rate. Therefore, they are growing, yes, but they are not creating value and the value investor would look at a company like Starbucks, but would avoid a company like Blue Apron because the growth is destroying value and they constantly need new capital to fuel that growth. Usually, those stories are very risky, can work out well, but the business model has been seen for the last 15 years and new investor suckers, sorry, invest constantly in such stocks and get burned and their cash simply gets from the investors allocated to the first shareholders of Blue Apron Snapchat that invested in the first rounds, so it's just capital allocation from the wealthy to the new wealthy. That's a different story. Now, how to adjust value? How to implement growth into value? Well, first as a value investor, you have to be conservative. Starbucks's management up till last summer thought it will grow earnings at 15-20% per year and then they suddenly say, oops, we are going to grow them at 12% perhaps. And that made a huge difference for everyone that was calculating Starbucks's earnings and future growth with the 15% growth rate. The difference of the 300 basis point decline is huge when you estimate valuations. So the best way to analyze growth when looking from a value investor perspective is to be conservative. I look at Starbucks and I estimate over the long term 5% growth and then I come to a value. If the company continues to grow earnings at 12% over the next 10 years, earnings in 2028 will be 6.2, which at a price to earnings ratio of 15 would result in a stock price of around 19. If I'm more conservative and attach a 6-point growth rate, I get earnings per share of 3.58 that with a price to earnings ratio of 15 leads to a price of 53, which is below the current price. So from a conservative perspective, Starbucks is now a little bit overvalued, still a good stock, much better than the rest of the market. However, I would prefer to see Starbucks at 40 at 30 before investing for the long, long term. Now, this is a very low value for Starbucks. However, if you follow 10 stocks, due to the volatility in the stock market, I can guarantee you that one of those 10 stocks in one year will fall below such a very conservative value growth analysis. And therefore, you have to always look at growth, look at companies that will grow and then follow them. Wait, be patient, there will be bargains. If you just find one good growth value stock per year and you invest in that one, over 10 years, you will find yourself with a beautiful portfolio of 10 value growth stocks that you have bought at very low prices that are giving you great return on investment, a great year return on capital, constantly bigger and bigger dividends. And that's how you invest by applying growth and value for the long term. Thank you for watching. Looking forward to your comments. I'll see you in the next video.