Very true. I see merit in what you say.
Like your work, I used to think with all this data. But I have moved on as I have got it wrong most times with these approximations.
Somewhere I read an academic paper – Best market returns happened in countries like Finland and Switzerland in the 80s when the economy was not growing fast. Reason attributed- In a stable slow growing economy, capital allocation was easier. Misallocation and experiments were minimized. Management didn’t waste money on so called innovation, but promptly paid it back to the shareholders saying “Thanks”.
Estimating growth rates is very difficult. You can have a range of outcomes. Market growth doesn’t guarantee company’s growth, to start with. Companies with increasing moat (~ increasing RoE) can claim at least existing growth rates. In bull markets, we try to estimate and invariably overpay for growth. In bear markets, we focus on value (with minimal growth projections) and get it right. Even though growth and value are connected at the hip, very few get it right focusing on growth estimates.
The only exact thing is the price you pay. Everything else is an approximation.
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