When performance strength is a worry

Never mind poor performance, John Stepek explains why a strong track record of beating expectations can also be a worry for stock pickers.

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Elizabeth Holmes: from hero to zero
(Image credit: 2015 C Flanigan)

One major risk to anyone investing in individual stocks (rather than an index fund, say) is that one of your carefully picked shares turns out to be in a much worse financial state than you thought. We looked at how to avoid such stocks in a recent issue of MoneyWeek. Now a group of academics think they have uncovered another key indicator of a company that's set to go bad a strong track record of beating expectations.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.