Jim, the one thing Graham could not know when he wrote about overreaction to legal problems is that we would end up with a society willing to bankrupt entire industries over real and imagined problems, and real and imagined contributions to those problems. Asbestos and breast implants come to mind.
Speaking as someone trained to evaluate risk, I would not touch MO with a 10 foot pole. That is because, in my opinion, one can not assess/guess the probability of bankruptcy, or even less horrible outcomes. Therefore, you can't have any idea whether the current price adequately discounts it or not. I buy stocks all the time where I can conceive of circumstances where the company goes bankrupt AND based on experience feel comfortable assigning a probabilty to that risk, and that the price adequately discounts it (GDC, for example). I can't do that with MO. (By the way, I learned this lesson up close and personal, many years ago, with an investment in Eagle Picher, which at the time was a solid company, down, cheap, but not out from asbestos involvement -- yet.) |
