It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. - Warren Buffett

GARP stands for Growth At Reasonable Price and is a fusion of value and growth investing. The term is not used often by amateur investors but you hear a lot about GARP funds.

It merely means that the fund is a growth fund, they are buying stocks that they hope will grow at above-average rates, but they insist on not paying too much. They usually have caps on the price earnings ratio and other measures of expense meaning that although they may have high hopes for the stock they buy at either a good discount or at "fair value", but don't pay too much hoping the stock will grow fast enough to make it worthwhile in the end.

The fact that GARP exists is a frightening concept for me. I would have thought that rational investors would realise that even the fastest growing stocks can trade at a price that makes them a poor purchase. If GARP is where they buy growth at reasonable prices, does this mean growth funds will pay any price, however silly? (Answer: often yes, observe how many tech funds bought total garbage when that bubble was on (not just the 1990s tech bubble, there were several bubbles), and the nifty fifty funds of the 70s... some funds are very speculative and not particularly choosy).

Although typically Warren Buffett identifies himself as a value investor, this is less true today than it was previously. In Buffett's early career he was very much a value investor in the Ben Graham tradition, though since he teamed up with Charlie Munger and subsequently read Phil Fisher's classic Common Stocks and Uncommon Profits I think one can come only to the conclusion that Buffett is a GARP investor, even if he personally would not agree to the terminology.