Time to Change Your Investment Model

Interesting analysis of how valuing of public companies is changing with an increased focus on intangible assets and decreased focus on earnings

http://www.cfapubs.org/doi/pdf/10.2469/faj.v73.n4.4

We demonstrate empirically that the gains from predicting corporate earnings, or consensus hits and misses—an activity at the core of most investment methodologies—have been shrinking fast over the past 30 years. We identify the main reasons for this loss of earnings relevance and propose an improved alternative to current investment methodologies, one that focuses on the “strategic assets” of the enterprise and their contribution to maintaining the company’s competitive edge.

Related Articles:

Published by

adam

I work for True Ventures, an early-stage venture capital fund with offices in Northern Virginia, San Francisco and Palo Alto. We partner with promising entrepreneurs at the earliest stages in the technology market providing hands-on management support to guide our portfolio companies through the challenges of early growth.