|Growth vs Glamour
|"The bottom line is that the academic definition of 'growth investing' isn't really a proper growth investment style. It is an investment style that invests in overvalued stocks. And the performance difference shown above also means that growth investing does not deserve the ridicule that is often targeted at it by academics and value investors who say that growth investors simply buy a load of glamour stocks at high valuations and then hope they will become even more expensive than they already are."
|Interest rates and growth stocks
|"the growth bubble that we experienced (and arguably are still experiencing) was not truly 'driven' by interest rates falling. They mattered a little bit, mathematically, but Mr. Market's belief in the false-narrative that they were the only thing that mattered perhaps was a main and important driver of growth's outperformance, and value's underperformance."
|Demise of the growthsters
|"on the whole the markets and growth stocks overall are far from cheap. If history is any guide, there is a decent chance that the next few years will hold some more market pain for the growthsters."
|Growth multiple contraction
|"In 2018, the business was trading at 14.6x sales. Right now it's 6.3x. Yes, the business is generating a lot more revenue and earnings today than it was then, but investors aren't willing to pay the same price. 276x earnings in 2018. 36x today."
|Partha Mohanram on his glamour G-Score
|"Partha Mohanram is the John H. Watson Chair in Value Investing and Area Coordinator of Accounting at Rotman. He has published extensively in the areas of financial statement analysis, valuation of growth firms, implied cost of capital and executive compensation." [video]
|Meatless future or vegan delusions?
|"With my story, which I believe reflects an upbeat story for the company, the value that I obtain for its equity is $3.3 billion, yielding a value per share of about $47. At the end of June 10, when I completed my valuation, the stock price was close to $170, well above my estimated value."
|Haste makes waste
|"In order to go from less than 1,000 stores to 13,000 stores we have had to make a series of decisions that, in retrospect, have led to the watering down of the Starbucks experience."
|Identify a growth trap
|"Growth Traps are companies that are rapidly expanding their businesses. Rapid expansion requires investment in operating assets. That investment places strain on a firm's infrastructure and results in declining margins. Because investors were overly optimistic for the stocks prospects, it is likely that these high flyers will not grow into their valuations and shareholder returns will suffer."
|The persistence of growth
|"Both the long term average and time series charts make this very clear: the growth rate advantage of high growth stocks from the past five years does not persist over the next five years. Growth stocks tend to keep growing, but their relative advantage over low growth narrows considerably. If and when the market prices stocks by extrapolating past trends into the future, there is an opportunity to bet against that misguided extrapolation (long value, short growth)."
|Groupon has no competitive advantage
|"Groupon, a service that keeps half the proceeds from discounts that connect consumers to local merchants - has no competitive advantage and can't get one."
|Bill Miller's Nov 2010 Commentary
|"It is useful to remember that the great bond bull market that began nearly 30 years ago was preceded by a 30 plus year bond bear market that took long term treasury yields from 3% to nearly 15%. The devastating losses people suffered were such that my friend Lee Cooperman dubbed bonds, "certificates of guaranteed confiscation," when he was overseeing the Goldman Sachs research and strategy effort. A common feature of that 30 year bond bear market was the bond swap. Almost every year, investors who owned bonds lost principal value as yields rose, so they sold their bonds in December and took a tax loss, replacing the bonds with others of similar maturity and quality. This continued year after year, inexorably. Finally, in 1982, yields started to fall. One elderly relative of mine had been taking her tax losses year after year, for over 30 years. When she asked me to look at her portfolio in late 1982, I told her there were some things I thought she needed to do. She said, "Oh yes, it's time for my bond swap." I told her that was not necessary as she now had gains in her bonds. She looked startled, and asked, "Is it legal to have gains in bonds?" I suspect that question may again be asked in the next 30 years."
|Luck, persistence, and what to do about it
|"Despite earnest and diligent study, analysts often produce company models that are wildly off the mark, usually erring on the side of optimism. Even analysts who consider ranges of value outcomes attach probabilities to favorable scenarios that are too high. Some researchers attribute this inaccuracy to overconfidence, but that is only part of the story. Another way to understand the challenge is based on what renowned psychologist Daniel Kahneman calls the inside-outside view. An inside view considers a problem by focusing on the specific task and the information at hand, and predicts based on that unique set of inputs. This is the approach analysts most often use in their modeling, and indeed is common for all forms of planning. In contrast, an outside view considers the problem as an instance in a broader reference class. Rather than seeing the problem as unique, the outside view asks if there are similar situations that can provide useful calibration for modeling. Kahneman notes this is a very unnatural way to think precisely because it forces analysts to set aside all of the cherished information they have unearthed about a company. This is why people use the outside view so rarely."
|Zero to $1 billion
|"After interviewing dozens of executives at billion-dollar firms, Thomson boiled down their management practices to what he calls the Seven Essentials. Some of these principles are strategic: Create a killer value proposition. Some are operational: Manage for positive cash flow from the start. And some involve leadership: Hire a second-in-command who can take care of the day-to-day while you think big picture. It has long been a business school staple that successful companies sell emotional benefits, not just products. Yet few entrepreneurs can explain why their business proposition is any better than the competition's. Not so with our Blueprint companies."
|Think quality over cost
|"When Philip Fisher died recently at the age of 96, it suddenly struck me that being a wise and patient stock-market guru may be the best route to a long life."
|The rewards of a long view
|"Phil Fisher began managing money in 1931. He was teaching at Stanford University 70 years later. In between, Fisher formulated a clear and sensible investing strategy, wrote one of the best investment books of all time, "Common Stocks and Uncommon Profits," and made a good deal of money for himself and his clients."
|Microsoft and the great game
|"The world's biggest software firm is pushing into the mobile telephone and computer-games businesses with a series of announcements this week. These are no interesting diversions, but a desperate attempt to stop new consumer products from stealing large parts of Microsoft's market over the coming years"