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Good point on what he paid for KO. I am not about to disagree with his argument, since it is well taken. I believe the crux of the problem is that stock prices have suffered from the same metric difficulties as monetary values did when we went off the gold standard. When dividends were important, it was straightforward to value stocks. When dividends went away, discounted cash analysis substituted, as a surrogate for what one would pay for that company if one were to buy it. Problem is, not many investors actually buy companies, they just buy its stock, and so its value is whatever someone else will pay for it, no more, no less. Greater fool theory. Nothing wrong with that when the market goes up, there are a lot of rich fools out there. Buffet, OTOH, was smart in what he did, but lately he has been a poor fool <g> |
