One way to think about the whole exercise - at a level deeper - is to acknowledge what happens as the stock moves into stronger hands - first into stronger retail /HNI value investors. And then when Institutional Hands move in.
As you have pointed out - stocks holding out - even on negative surprises - flat earnings or degrowth - is the re-inforced belief by the stronger hands in the larger context of sustainability of superior earnings profile (which may or may not be misplaced), but I think there lies the clue. Beyond a point - Management not walking the talk, say - valuations may not sustain for too long - proof of the pudding is ultimately in the eating!
We are all learning and refining our understanding as we go along - with our direct/indirect experiences with some of these strong stocks/businesses. Thanks for triggering a distinct thought process in me for taking this very thought forward in a formal way - in ValuePIckr’s most prized IP Capital Allocation Forum - by energising some of our young turks!
If you haven’t checked that out, please do. All our big leaps in investment thinking/refinement are captured there for everyone to imbibe, participate and embellish