RT Journal Article
SR Electronic
T1 Great Companies: <em>Looking for Success Secrets in All the Wrong Places</em>
JF The Journal of Investing
FD Institutional Investor Journals
SP 61
OP 72
DO 10.3905/joi.2015.24.3.061
VO 24
IS 3
A1 Gabrielle Baum
A1 Gary Smith
YR 2015
UL https://pm-research.com/content/24/3/61.abstract
AB Many management books ransack lists of thriving companies and claim to have discovered these companies’ secrets to success. However, any group of companies (bad, good, or great) will inevitably have some characteristics in common. Finding such traits only confirms that we have looked for them and tells us nothing about whether these characteristics are responsible for past successes or are reliable predictors of future success. Nor do these traits tell us whether these companies’ stocks will be profitable investments.We illustrate this concept by considering the companies praised in the best-selling books Good to Great and In Search of Excellence and then comparing them to Fortune’s Most Admired companies.TOPICS: Fundamental equity analysis, portfolio theory, portfolio construction