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Politics : High Tolerance Plasticity
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To: Tommaso who wrote (2704)4/2/2001 4:37:34 PM
From: The Ox  Read Replies (1) of 23153
 
LoL,

I've noticed that "analysts" are starting to lump all companies together for their evaluation processes. This is a 'classic' mistake and one that will allow for opportunities to make some decent money in the future. There seems to be very little differentiation between companies that have solid assets, zero or low debt with solid cash flow and those companies that lack these points. It seems to me the investment community is TOO focused on earnings as a overreaction to the internet/Nasdaq bubble of 99/2000. For example, a company generating $100 Million in revenue is being 'valued' the same as a company generating $5 Billion in revenue if they deliver the same eps with similar revenue growth rates. It seems that the valuation metrics are not giving credit for low debt, clean balance sheets and other important factors in a company's future (customer base, industry niche, etc). The barrier to entry also appears to have little place in the valuation process these days.

Is anyone else noticing the same trend? Is this a reaction to the fact that few companies are giving clean forward guidance? It sure seems that FD arrived at just the right time to zip shut the mouths of company officials for fear of 'being wrong'. Better to say nothing than to make a mistake?
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