The main intention for writing this blog to warn investors that you shouldn’t buy the companies which are enjoying peak earnings. Peak earnings often create Recency Bias and you may tend to assign higher P/E multiples for higher growth in recent periods. By doing this what are you essentially doing is double accounting for positives in your valuation.
If we were to believe statistics, just like cyclical low earnings, the peak earnings also reverse to the mean. We have seen this across market cycles and expect future to follow the same trajectory.
ProfitAim as an Investment Advisory and Research Company would suggest investors to trade on the basis accurate share market tips after in depth market research. Here, our experts keep their eyes on every news affect which strongly affects the market price movements and generate profitable sure shot stock cash tips. We have a special panel of equity market research analysts who have years of experience in equities.What should an intelligent investor should do?
An intelligent investor would spend more time studying companies which are at cyclical lows and trade at cheap valuation on normalized basis since market would have discounted these companies like there is no tomorrow for them. And SELL the companies which are trading at their peak earnings and peak multiples. This way you can always buy low and sell high.