Armin: QCOM vs. INT
You have a point about the tax efficiency of holding a growth stock (QCOM) vs. having to sell a value stock (like INT). Talking about a 20 or more year period for comparing investments though is too much of a stretch for me. Firstly, I have trouble visualizing that QCOM or its ilk will be around that long. And secondly, I have trouble believing today's investors are long enough long term holders to stick with such companies.
I've gone back to my Dreman references, but I can't find what I'm looking for, which is a Forbes' article where Mr. Dreman talks about the performance of high pe stocks. You know it's one of his top/bottom quintile-kinda comparisons, but his point is (I believe) that yes, there are companies that will increase earnings year after year, they are growth companies certainly, but... in looking at these companies over time, their stock market performance does not continue to increase. At some point (3 years from peak eps?? I need article for backup) with these high pe stocks, the stock performance decreases, regresses even as the company earnings keep increasing.
Now maybe with a monopoly things are different. But I don't know that qcom is a monopoly. Sure "they" say it is, but I don't know. Of course, I also don't know that much about INT either, but I'd rather assume it is what it appears to be, and not assume about qcom that "they" are right about its monopoly position or future prospects.
Looking back this year, I believe there were times a couple of these high-flyers could've been considered value plays. For Yahoo, that was when it was selected for the S&P 500. As was posted here by somebody, that selection materially increased the immediate demand by funds for that stock regardless of Yahoo's price. Anyone realizing this could've made a "value" play imo. And for qcom, the inflection point was when Nokia gave into qcom on the standards brouhaha. Qcom's franchise value then materially increased. (It didn't increase before the capitulation, imo, because it was not at all certain or clear when or if qcom would prevail.) But now, as we both agree, it's too late to buy qcom. You've chosen VARL; I picked INT.
If it's now a comparison between INT and VARL, then based on your superlative record (every stock you've mentioned here seems to me to have performed Very Well after your call) vs. my uh, not-so- superlative value picks, then I will also look at VARL.
Paul. |
