There is a well-documented tendency for investors to have unrealistically high future growth expectations for popular companies and unrealistically low expectations for currently out-of-favor companies. Thus, since expectations are baked into stock prices, more often than not we find rapidly growing companies to be overvalued and slowly growing companies to be undervalued. This is the essence of value investing—to exploit prices that are generally too high due to over-popularity or too low due to under-popularity… In addition, our economic system is very good at encouraging competition for currently successful companies and discouraging competition where the outlook doesn’t seem so good. The effect of growing or declining competitive forces is to slow future corporate growth for today’s rapidly-growing companies and to help future corporate growth for today’s slower-growing companies. In short, the stocks of today’s faster-growing companies typically have two strikes against them: Their stock prices tend to be bid up too high on the basis of over-zealous expectations, and fast growth leads to more competition, which inhibits fast growth. Similarly, today’s unpopular stocks are aided by excessively low expectations and by a reduction in future competition.