A Great Company Can Be a Great Investment
Posted: 8 Aug 2006
A classic investment mistake is to confuse a great company with a great investment. It is a mistake because a company's well-known virtues are presumably already factored into the price of the company's stock. This study tested this mistake by looking at the stock performance of the companies identified each year by Fortune magazine as the most admired companies in the United States for 1983 through 2004. Surprisingly, a portfolio of these stocks outperformed the market by a substantial and statistically significant margin, which contradicts the efficient market hypothesis.
Keywords: Equity Investments, Fundamental Analysis and Valuation Models, Portfolio Management, Equity Strategies, Investment Theory, Portfolio Theory
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