Investing strategies need to evolve

(Excerpt from Keep Running! By Morgan Housel)

In his book Investing, Robert Hagstrom wrote about strategies that once worked but eventually withered:

In the 1930s and 1940s, the discount-to-hard-book-value strategy was dominant. After World War II and into the 1950s, the second major strategy that dominated finance was the dividend model. By the 1960s investors exchanged stocks paying high dividends for companies expected to grow earnings. By the 1980s a fourth strategy took over. Investors began to favor cash-flow models over earnings models. Today it appears that a fifth strategy is emerging: cash return on invested capital.

I’d update this. Since about 2010 the strategy that works is just revenue growth.

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