The main intention for writing this blog to warn investors that you shouldn’t buy the companies which are enjoying peak earnings. Peak earnings often create Recency Bias and you may tend to assign higher P/E multiples for higher growth in recent periods. By doing this what are you essentially doing is double accounting for positives in your valuation.
If we were to believe statistics, just like cyclical low earnings, the peak earnings also reverse to the mean. We have seen this across market cycles and expect future to follow the same trajectory.