Value is more important than the trend in earnings. Undervalued low- or no-growth stocks beat expensive high-growth stocks and by a wide margin. Mean reversion pushes up undervalued stocks and pushes down expensive ones. Undervalued low- or no-growth stocks beat undervalued high-growth stocks. We expect undervalued high-growth stocks to beat undervalued low-growth stocks. We assume high-growth value stocks are good stocks at bargain prices. But the data show mean reversion acts on growth, too. It pushes down high-growth stocks and up low- or no-growth stocks.
