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Past results does not = future?
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i4value
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03-Jan-2024 07:32
Yells: "i4value.asia" |
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I am a fundamental investor that relies on historical information to analyse and value companies. Whenever I tell this to investors, they will often cite the well known disclaimer used by all financial advisers &ndash past results does not equal future performance. When I look at a company&rsquo s performance, I know that it is due to the &ldquo economic and other resources set-up (strategies, management, funding, etc).&rdquo that the company has. So if these result in a good performance in the past, there is a good chance that it will continue to do so in the near future. Don&rsquo t think in terms of a continuation of the past numbers. Think in terms of the continuation of the past set-up That is the reason why track record is important in my analysis. It gives me confidence that the company has the set-up in place to deliver good performance. Take the example of Rimbunan Sawit which had negative ROE yearly for the past 8 years. In contrast, here are many plantation companies (eg KFIMA) that had delivered positive ROE yearly for the past 8 years. So it cannot just be an external problem. I would think that unless there is some major change in the setup, the past = the future. |
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