Forget moonshots and deep value – real wealth is built quietly. These six underappreciated compounders may lack flash, but they deliver where it matters.
The Next Big Thing.
Our investment world is obsessed with it.
Whether it’s a much-hyped tech unicorn, the latest disruptor, or a supposed game changer, investors are constantly chasing the next big story. At the other end of the spectrum lie the so-called «deep value plays» – stocks that seem so cheap on paper that ignoring them feels almost foolish.
But both extremes come with risk (Chart 1). And risk brings us to two familiar pitfalls: value traps and growth traps.
It’s time to take a closer look.
Value traps are well-trodden territory for value investors: A stock comes under pressure. The valuation looks attractive – almost too good to be true. A few clouds on the horizon? Nothing to worry about. Or so it seems. But then, fundamentals disappoint again. The issues aren’t temporary – they’re structural. The stock continues to decline, for good reason. Business schools around the world are filled with case studies of classic value traps.
But there’s another, lesser-known – and arguably more dangerous – cousin: the growth trap.
Here, the appeal lies in the narrative: disruption, total addressable market, technological breakthroughs, hypergrowth, moonshots. Investors fall in love with these stories. But growth stocks are far from immune to disappointment – in fact, they’re especially vulnerable when the market cycle turns against them. And when it does? The punishment is swift and severe.
Chart 1: When Value disappoints, markets are mad. When Growth disappoints, they are merciless
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