At some point, the growth becomes obvious and essentially everybody knows about it. The stock is officially termed a growth stock. The smart money that got in early is getting out with a hefty profit, and naive investors step in to buy what they’ve been reading about in the financial pages or hearing about on TV. Then the momentum stalls. What follows is the loss of EPS momentum, an eventual negative earnings surprise, and downward revisions, all of which puts considerable pressure on the stock price. This earnings maturation cycle happens time and time again, market cycle after market cycle.
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