@hsriram – I get your point that a value investor needs to focus on the intrinsic value. But arriving at the intrinsic value often requires us to make some growth assumptions. So what growth assumptions should we make?
Looking at the growth assumptions that is touted around, I wanted to validate. Sure someone, somewhere, sometime will always be growing at a scorching pace; someone at a slower pace. So if I were to ask myself a question – suppose I throw a dart on the ticker board, what growth rate should I guess for the stock the dart hit? That led me to the question of anchor rate of growth.
You may ask well, just take the GDP growth rate. But as I conclude in my article, GDP growth rate has been poor, very poor, in explaining earnings growth. Maybe take sector growth, but they keep changing very now and then and hence not as reliable as I would like. Who fore saw negative growth for motorcycles a few years ago?
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