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Fascinating insights in the recent @BCG Value Creator's Rankings.
Ignore the recent volatility. This is a roadmap to long-term investing success.
It begins by describing the market's best performers. $SHOP, $AMD & $SQ top the list in best 5-yr returns.
https://www.bcg.com/publications/2021/interactive-tsr-value-creator-rankings-2021
Ignore the recent volatility. This is a roadmap to long-term investing success.
It begins by describing the market's best performers. $SHOP, $AMD & $SQ top the list in best 5-yr returns.
https://www.bcg.com/publications/2021/interactive-tsr-value-creator-rankings-2021
How did those companies reach the top?
Combined with their "10 lessons report" from 2018, they offer several insights for investors who are committed to to compounding wealth over the long term.
I will share three of those insights in this thread. https://www.bcg.com/publications/2018/value-creation-insights-ten-lessons-20-years
Combined with their "10 lessons report" from 2018, they offer several insights for investors who are committed to to compounding wealth over the long term.
I will share three of those insights in this thread. https://www.bcg.com/publications/2018/value-creation-insights-ten-lessons-20-years
1) Tech stocks are more expensive now. So execution really matters.
"Tech companies saw their P/E multiples increase by 78% from Dec 2015 to Dec 2020."
"The real value creation task is the need to make more & better investments than the ones already anticipated."
"Tech companies saw their P/E multiples increase by 78% from Dec 2015 to Dec 2020."
"The real value creation task is the need to make more & better investments than the ones already anticipated."
2) Focus on the business rather than the valuation multiples.
Revenue growth remains the largest contributor to long-term value creation.
"For top performers during five- to ten-year periods, revenue growth accounts for an average of 50% to 70% of value creation."
Revenue growth remains the largest contributor to long-term value creation.
"For top performers during five- to ten-year periods, revenue growth accounts for an average of 50% to 70% of value creation."
3) Pay attention to the cash flows & capital allocation.
Whether its the ROI of existing assets for "value" companies or M&A for "growth" companies, cash flows are vitally important.
"Since 1926, about 40% of the S&P 500's TSR has come from cash returned through dividends."
Whether its the ROI of existing assets for "value" companies or M&A for "growth" companies, cash flows are vitally important.
"Since 1926, about 40% of the S&P 500's TSR has come from cash returned through dividends."
If TL;DR --
Tech stocks have been selling off this week, due to fears of inflation contracting their valuation multiples.
But over 10-yr periods - through both bull & bear markets - the best performers find ways to deploy their cash to unlock profitable new opportunities.
Tech stocks have been selling off this week, due to fears of inflation contracting their valuation multiples.
But over 10-yr periods - through both bull & bear markets - the best performers find ways to deploy their cash to unlock profitable new opportunities.
Market selloffs can be scary & cause many investors to question their strategies. We'll have several @7investing advisors on tomorrow's livestream to answer your questions.
But the overall secret to wealth creation?
Find great businesses & hold them for long periods of time.
But the overall secret to wealth creation?
Find great businesses & hold them for long periods of time.
