Are Growth Stocks Experiencing Déjà Vu All Over Again?
During bull runs in the stock market, investors routinely get away with taking short cuts when it comes to fundamental analysis. Vague “rules of thumb” such as P/E to growth, for example, become popular for justifying the price of growth stocks. For although a miss hit may result in under-performance of a particular stock investment, there is a lower likelihood of a portfolio drawdown as most stocks will tend to rise with the tide. Over the past ten months, we have experienced the greatest short term bull run since the 1930s and most economists point to the end of the longest recession in recent history having occurred a few months back. But an end to the recession does not necessarily suggest we will experience the robust “v-shape” recovery we all hope for. This sets up a more difficult environment for investors for next year, particularly in regard to high profiled growth stocks that have regained relatively lofty valuation levels. As of December 24, 2009, Starbucks (SBUX) was tradin
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