Value stocks have higher earnings vol than growth stocks. Huh??

Schweser problem set 1, exam 3 morning paper q3 b. Shouldn’t growth stocks have higher earnings volatility?? TIA!!

I saw that too & thought it was garbage but just moved on. Anybody know what they’re talking about?

they are looking at it from a cyclicality standpoint…so value stocks, which are typically more cyclical have more volatility. real world its hard not to think of booms/busts of growth but think about oil/nat gas stocks…they were printing money last fall and now some have negative earnings (demand destruction, cyclicality, etc.)

You mean to tell me that Oil companies (other than the last year’s biggest decrease in oil prices ever) have more volatile earnings than tech?

on saturday they do… just think cyclicality = volatility = utility/bank = value

and if you bring the real world into this again, the CFA institute will ban you. now get back to your GIPS memorization :wink:

Good point. I’m losing my focus. It’s not what makes sense in the real world, it’s what they think makes sense that counts.

So that’s it? It’s more volatile cuz it’s cyclical?? That seems… Not too convincing… CFA’s getting more annoying by the day :frowning: