I would suggest studying the history of different industries and...

I would suggest studying the history of different industries and how they perform in different periods of time.

Businesses can perform well over long periods of time but their stock price might not reflect that. I'm sure you've heard of the quote in the short term, the market is voting machine, but in the long run it is a weighing machine.

Here's the perfect example (growing fundamentals with a declining stock price) that happens to be quite recent (less than 10 years ago).

In the past 3 years, this business has been growing revenue rapidly 83% growth, 55% growth, and 44% growth albeit slowing growth (83% down to 44%). The stock price was down 60% from its peak.

They were also competing with huge competitors in the US. Their biggest competitor is a SP500 company.



No one was paying attention to this company eventhough it had very clear signs of a moat with a very long runway ahead of it.

But investors didn't care.

Most stocks aren't that clear hence I say this is the perfect example of in the short term, the market is voting machine, but in the long run it is a weighing machine.

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Where's this stock today?

Here's their latest price chart.

And the chart in the image above is shown in the red box.






This company is Xero.

Back then, no one was paying attention to Saas companies. Same thing happened to Wisetech. Look at their chart in the same period, same thing. No one cared.

Now, investors are looking for "recurring revenue", tech, "Saas", "Buy now pay later", "AI", etc.

This is almost the perfect example with clear signs of growing fundamentals with a declining stock price but in the end, the weighing machine was heavier.

If you look back in history, you'll find many examples.

There was the automotive boom when Ford released their first automobile. Anything with "Motor" in their name received premium valuations. Sounds very familiar today in the EV space. Anyways...today, the only automobile manufacturers (excluding the new EV manufacturers like Tesla) left in the US are GM and Ford.

Another boom was the Uranium boom when prices spiked from $10 to over $100 (peaked at $140/pound). Mining companies were adding "Uranium" to their name and the market suddenly had hundreds of uranium mining companies.

How about waste management? No one cared about these companies. Who wants to be an investor of a waste management company? Today, look at these companies. Nothing changed about the industry just investors' perception.

Apply this today and you have companies putting "Pay" in their company name to get Afterpay-like valuation or putting "AI" in their investor presentation.

These are just a few examples. Trends fade. Fundamentals stick. In the short term, the market is voting machine, but in the long run it is a weighing machine.