Over the last 2 years, we’ve learned exactly why growth stocks are so exciting and appealing and exactly why a lot of people are probably better off not even trying.
From March 2020 to the early parts of 2021, we watched growth stocks or funds like Peleton, Zoom, and ARK Innovation ETF climb many multiples…only for the majority of these gains to evaporate over the last few months.
Over the last year, PTON is down by 83%, ZM is down by 63%, and ARKK is down by 51%.
In fact, if you look at the retail fund flows data, it’s fair to conclude that most retail investors lost money as inflows were at their highest level during the final weeks of their ascent. These investors made the rookie mistake of buying high and selling low and learned a very expensive lesson.
We’re naturally drawn to growth stocks, because the best-performing stocks of the future will emerge from this group. These are the companies that are transforming industries or even spawning new ones in many instances and have the potential to deliver life-changing returns.
The problem is that the vast majority of growth stocks are egregiously overpriced and have no chance to deliver enough future profits to justify their far too lofty valuations.
This is why I wanted to talk about 3 clear cut solutions that will increase your odds of success when selecting growth stocks.
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