The Problem With Growth Stocks

In the preceding video, analyst Austin Smith emphasizes how important it is to be able to recognize and differentiate between a good company at a fair price and and a great company at an outrageous price. By their very nature, markets will inevitably and eventually adjust for overpricing, and when this happens, the correction can deliver a major blow to shareholders. This is something to keep in mind with stocks such as LinkedIn, Zillow, and Chipotle -- all impressive companies with great performance -- but it's imperative to keep in mind how quickly prices can turn when investing in growth stocks.

This is true even for giants such as, which everyone knows is the big bad wolf in the retail world right now. But at such a sky-high valuation, there's worry that it will be Amazon's share price that gets knocked down instead of competitors'. We'll tell you what's driving Amazon's growth, including how to know when to buy and sell, in our premium research report on the company. You'll also be covered with a full year of free analyst updates to keep you informed as the story changes, so don't miss out -- click here now to get started.

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Austin Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of, Chipotle Mexican Grill, LinkedIn, and Zillow. Motley Fool newsletter services recommend, Chipotle Mexican Grill, LinkedIn, and Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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