// learn · Market history
When quality stocks de-rate
A company can keep growing and its stock can still fall for years, because the price you pay for that growth (the multiple) can compress. This is one of the least understood ways investors lose in "good" stocks.
Great company, falling stock
Around 2021, many excellent software businesses traded at very high multiples of sales. As interest rates rose in 2022, the maths changed: higher rates make far-off future profits worth less today, so long-duration growth stocks re-rated hard. Revenue kept climbing while share prices halved or worse. The businesses were fine; the price had been the problem.
Why rates do this
A growth stock's value sits mostly in profits years away. Discount those future profits at a higher rate and today's fair value drops, most for the highest-multiple, least-profitable names. That's why "quality" doesn't protect you if you overpay.
Reading a 13F
Large US investors must disclose their holdings quarterly in a 13F filing. It's a useful window into what famous investors own, but read it correctly:
- It's delayed (up to 45 days) and only a snapshot, positions may already be gone.
- Longs only. 13Fs don't show shorts or many derivatives, so a "portfolio" can be misleading.
- Context over copying. Use it to study reasoning, not to blindly mirror trades you can't see the full shape of.
Educational market information, not financial advice. Markets carry risk of loss, do your own research.