Uncle Frank,
Thanks for the complements - I appreciate them.
I agree that the example that I offered in an earlier post was not really realistic, but even looking forward, which I do in the analysis itself, the cash needed to cover the interest on this theoretical investment is more than the Company itself would generate.
Gorilla Game was on target when it was written, but the popularity of the book itself has helped to create the high tech overvaluations that have emerged over the last two years. GG was published in early 1998, and if you look at the chart of CSCO in my analysis that compares economic value to market price, you will see that this stock was reasonably valued at that time. However, two and a half years later...
Actually, five years ago I owned a couple of the "Pillars of NASDAQ", and I made money as a result. At that time they were generally not overvalued. But I also watched their progressive overvaluation, and sold accordingly. Yes, I left money on the table, but I also made money.
Net-net...the same economic processes are in effect for all investments.
Bob Davis |
