growth investing is a strategy where an investor seeks out companies demonstrating signs of high earnings that are well above the average rate compared to other firms in their industry and within the overall market. investors interested in these stocks focus on capital appreciation and future earnings potential, and often choose investments that they believe will outperform income stocks, which are thought to exhibit slow growth. while income stocks pay out earnings to their shareholders in the form of dividends, growth stocks reinvest the earnings into the company to achieve further growth. tech companies and emerging markets are commonly associated with growth investing, as they are often priced higher than their earnings or book values. moreover, small cap stocks are frequently considered as part of a growth strategy with the assumption that the market underestimates the potential value growth of these smaller and normally younger companies. however, like most investing strategies, a degree of risk is involved when developing a portfolio. growth investing with its potential for high returns is subject to significant fluctuations in stock prices as earnings are typically uncertain. for example, ? is looking to add a high performing stock to her portfolio. after some research and deliberation, she uncovers a relatively young .com firm that she believes develops a strong digital product which despite weak short-term expectations will pop in the long-term. despite the market ? the poor earnings sentiments and pricing the stock as such, ? believes she is getting the stock at a significant discount. if her convictions are correct, she may see a significant return on her investment before the market can adjust accordingly and thus receive an above average return on her purchase.