McDonald’s revenue plumetted for 7 years straight from 2014 to 2021, but the stock roared on for those seven years and more than doubled. How can this be?
This brings me to a deeper question. Is it because McDonald’s is in so many ETFs and mutual funds?
I did a little research and found that over 43 ETFs hold McDonald’s in its top 15 holdings.
How were ETF managers so unphased by this? Did they just know that McDonald’s has such a strong brand name that their investors would be happy to see it included in their ETF no matter how poorly it was performing.
I understand that stock evaluations are often times out of whack with revenue. But this seems like an extreme case.
I am wondering if anyone can explain this disconnect, and would be interested if you think this disconnect is caused by passive investing.
View Reddit by DoU92 – View Source
