Link of the Month: The Level and Persistence of Growth Rates

For those of you with friends and family who believe in the Easter Bunny and the ability to pick stocks with persistent earnings growth; Chan, Karceski, and Lakonishok present a wonderful working paper confirming what informed participants already know—that although it is possible to identify superior growers, the market got there long before you did and grossly inflated the price. Sales growth persists better than earnings growth, which is not surprising in a market economy, where profitability attracts competition.

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