Mar

9

This is very, very important. In previous career as a consultant, I reviewed hundreds if not thousands of pitches for "growth stock" managers. At least half of them had the same theme, some form of informal study about how accelerating earnings estimates, increases in number of analysts raising estimates, etc., had a positive impact on stock prices.

Because such numbers are easy to calculate, and because there are so many players playing that same game, I generally found it amusing that one would think one could make money in a strategy that is widely followed. If I prodded a manager on that, the response was always something along the lines of "well, but the numbers continue to work".

Well, now we know why "the numbers continue to work". The numbers are no good. Click for relevant article.


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