Growth Investing
Pay up for businesses compounding fast — the P/E matters less than whether growth persists.
The Major SchoolsIntermediate 5 min read· Lesson 2 of 5 in Investing Strategies
The idea
A company compounding revenue 30%/yr doubles in ~2.5 years; today's 'expensive' multiple can be tomorrow's cheap one. Growth investors underwrite the durability of growth: market size, competitive advantage, unit economics, reinvestment runway. PEG (P/E ÷ growth) crudely normalizes price against it.
The risk
Everything hangs on continuation. A growth stock that merely decelerates gets repriced violently — multiple compression AND estimate cuts at once. Position sizes must respect that asymmetry.
Growth + momentum
Great growth stocks spend months on the momentum leaderboards — the Factor Ranking tool (MOM_12_1) mechanically surfaces where the market already sees compounding.