The Wisdom of Buying Absurdly Expensive Stocks
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December 2020
2020 has been a story of the big getting bigger, with valuations for the largest companies in the S&P 500 Index, particularly the FAANGM tech behemoths, reaching near-record levels. In this article, we ask whether such valuations can ever be justified. We look in depth at the historical performance of stocks that have hit extreme valuations and conclude that, while the picture is not a simple one, it is unlikely that …
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