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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: Trebor who wrote (2284)12/3/1997 12:34:00 PM
From: Tim Bagwell   of 42834
 
There are some stocks that many people and fund managers simply want to own, regardless of the valuations.

This sounds like "tulip-mania" where the price exceeds value based only on the existence of a "greater fool" who is willing to pay more. Over the long haul the market will always correct the price to a reasonable value. It has to work that way.

There is an intrinsic value to KO that may, arguably, give it a premium to the market. This intrinsic value is due a mass market that will buy its product no matter what happens to the economy. The big bear could show up tomorrow and people would still buy their Coke just as if nothing happened.

But at a PE of 40 KO is quickly approaching that region where the "greater fool" theory will be tested.
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