After going through countless of different categories of stocks, that include cyclicals, financial, growth, the concluding consensus is that growth is the way to go. And growth is not growth in earnings first. That is not how the market is valuing the stock. If not, then crappie stocks like CISCO would have returned to its dotcom highs and surpassed it. In fact, it has lagged very badly despite growing earnings by 4 x. So remember, not the earnings growth first. The market only looks at one thing at the start- revenue growth. How much are you growing and then, it looks at whether you will end up profitable in the long term. That ks why Amazon is 155,000% above IPO price, and despite dropping 90% during the dotcom bubble. Identifying the right ones early, dollar cost averaging through is all we can do, for secular compounders. Ignore the noise. Know when the stock has risen too much and take profits off the table at right junctures. Other than that, buy into quality secular compounders. Not cyclicals that will get smashed shortly as the environment turns against them.
Comments