I am catching up after a few days, so I hope this point hasn't already been made sixteen times in the posts that follow, but ...
The people who would be upset with that scenario might wonder if they couldn't have done a better job of assessing the risk and gone with a different stock or waiting for it to lower at least somewhat before buying.
Isn't the key word here "risk"? Doesn't this simply illustrate the difference between established gorillas and gorilla-might-becomes? With hindsight, one can see that if the price at purchase was X% lower than it was, that one might be Y% less annoyed at the size of the drop, but that is just hindsight. I'm not suggesting that it is somehow a bad thing to attempt to notice whether a prospective purchase is more or less attractively priced today relative to recent and expected pricing ... after all, that is what lies behind buying on dips, which is clearly sensible. But, what I think this example illustrates, more than whether any particular valuation is positive or negative, is that buying really established gorillas puts one in the position that such timing is far less likely to matter over even fairly modest time intervals, but the farther from that position one goes, the risk is far greater, not only of short term variations which may not correct quite so readily, but also of actual failure. |
