• Bloomberg published an article citing academic research noting firms with high expected profit growth tend to underperform
  • Longtime readers of ours flagged us as we wrote extensively about this issue and how to exploit it in our 2012 paper The Siren Song of Growth
  • The chart below shows the returns to firms with the highest expectations have only been better at the peak of the internet bubble
We don’t think this is complicated: this will likely end very badly.

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  1. Margin of Safety Risk-Averse Value Investing Strategies for the Thoughtful Investor, Seth A. Klarman, p. 113
  2. Bottom 20% of firms in the Kailash ABM Universe based on 36m trailing beta, ex-financials

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