Posted by: Michael Mandel on May 15
I’ve been having a debate with Jeremy Siegel about his new book, The Future for Investors. In the latest round, Siegel did some interesting new calculations which show that companies in the S&P 500 with 5-year revenue growth in the lowest quintile tend, on average, to have higher returns than the market.
So “Siegel’s Rule” (my term, not his) for investment would suggest that it’s a good idea to rank the companies in the S&P 500 by revenue growth over the past 5 years, and then put more money into those companies in the bottom quintile of revenue growth. Today, such companies would include such names as Lucent, Merrill Lynch, and Merck.
If there’s interest, I can come up with a longer list of companies with low revenue growth over the past 5 years.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.