Thread by @IntrinsicInv

Here is our five part growth forecasting series. While the series focused on forecasting growth for faster than average growing businesses, the margin for error is often *less* for slow growth companies. See our prior series on slow growth risk at the end of this thread. 1/x

Growth is to investors what the song of the Sirens was to Odysseus. Yet investors shouldn't just ignore growth potential as traditional value investing often implied. 2/x intrinsicinvesting.com/2021/10/04/for…

But growth forecasting is plagued by systematic, excessive optimism. So investors must find a way to control for this as it is the key reason growth investors underperform. 3/x intrinsicinvesting.com/2021/10/05/for…

But while using base rates as a forecasting tool is table stakes for successful forecasting, they are far from a crystal ball and must be applied with their shortfalls in mind. 4/x intrinsicinvesting.com/2021/10/06/for…

Researchers on decision making and forecasting are clear that there is no one "right" base rate and that base rates must be integrated with a direct analysis of the specific forecast being made. We use our Netflix growth forecast as an example. 5/x intrinsicinvesting.com/2021/10/06/for…

Some companies have such idiosyncratic positioning that they break the base rates of more typical companies. We explore "category killers that benefit from positive feedback loops in rapidly growing markets" as an example. 6/x intrinsicinvesting.com/2021/10/08/for…

While our series focused on forecasting elevated growth, we also said all investors in all stocks make at least implicit forecasts. In a prior series we discussed why low growth stocks are risky due to the concept of stall speed. 7/x intrinsicinvesting.com/2019/02/22/the…

We offered a case study of our investment gone wrong in Prestige Brands to illustrate how small changes in forecasts dramatically impact valuation of low growth stocks. 8/x intrinsicinvesting.com/2019/02/27/the…

Concerningly, given our focus on high ROIC businesses, we explored how it is these types of companies for whom stall speed risk is most negatively impactful. 9/x intrinsicinvesting.com/2019/04/04/the…

We ended our series, written in 2019, by looking at the New Normal economic thesis and how "low growth for good" would impact the fair value of the overall market and impact key segments very differently from each other. My times have changed! End/x intrinsicinvesting.com/2019/04/08/the…