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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Thomas Mercer-Hursh who wrote (44712)	7/19/2001 6:07:11 PM
From: Pirah Naman	Read Replies (1) of 54805

Thomas: isn't the fact that the stock is probably near a low more important in this context than what its current ratios are? Speaking very generically here (forget SEBL for the moment) there are two problems which come to mind. One, what is the likelihood that our assumption of any stock being near a low is correct? Seems we've seen a lot of lows over the past couple of years which turned out to now be highs. Two, even if it is near a low, what does that tell us about its future movement? After all, there have been numerous companies over the years whose stocks basically did nothing for a few years, despite the businesses performing well. Why? Because the shares were recognized as overpriced. To somebody looking at them without considering valuation, they might have seemed to be "near lows" and "having sat for a long time, should be ready to rise." Sometimes, just outperforming relative to other businesses isn't enough. My suggestion, which will no doubt come as a total shock and surprise to you, is to look at the valuation, not the pricing. - Pirah

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