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It's not about whether they'll grow, it's about whether they'll grow more than is priced in
by adam_arthur 3y ago
It's not about whether they'll grow, it's about whether they'll grow more than is priced in
- mnky9800n 3y agoDoesn't that assume the market is perfectly able to assess value? As an example the market decided Netflix was a terrible value when they announced they were a video streaming company in like 2008ish losing around half their value. Except we all know now that was not a priced in moment.
- adam_arthur 3y agoThat's an example of "growing more than is priced in"
- mnky9800n 3y agoI thought if the market is efficient then everything is always priced in?
- adam_arthur 3y agoThe market is clearly not efficient, otherwise there would be no opportunity for alpha. You can go onto the market today and buy like-kind stocks at double digit discounts to valuation just because they're smaller cap/lesser known. e.g. Retail REITs, where the business and risks are almost identical. EMH as commonly interpreted is clearly wrong in my view. What is true is that the majority of people can't beat the market picking stocks, but that doesn't mean there aren't observable inefficiencies. Just that most people don't care or know how to observe them