Don’t Be Fooled By Corporate Losses

Baruch Lev
By Baruch Lev
A colleague opens his MBA finance class by asking the students: “Who would invest in a company which reported 10 consecutive years of losses?”

Some of the students wonder whether they are in the right class, and no hands are raised. The instructor continues: “Too bad, if you had invested in such a company, say Amazon or Tesla, you would have been a billionaire by now.”

The instructor’s case isn’t an aberration. In fact, investing in losing companies, as long as you know which ones to choose, is very lucrative.

Read the full Financial Times article.

Baruch Lev is the Philip Bardes Professor of Accounting and Finance.