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Strategies & Market Trends : Value Investing

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To: Joan Osland Graffius who wrote (14162)	3/24/2002 12:31:30 PM
From: Bob Rudd	Read Replies (1) of 78594

I'm looking at MRK too. I see regulatory, mature development strategy and generic competition headwinds. S&P has it avoid and on 3/15 Arnhold & Bleichroeder downgraded it to SELL from reduce. Analysts are most believable when they turn negative...not infallable, but I pay attention cause they're willing buck the bullish bias. The tough thing for me about evaluating the pahrma's is not having a feel for the 'product' and it's prospects. Even the so-called experts that DO have a feel for how R&D is going to pay off get it spectacularly wrong fairly often. These are some of the reasons I tend towards higher discount rates. Note, too, that this industry can have some rather extended 'flat spots'...on the linked chart, note the 12 years from 73 to 85: finance.yahoo.com All that said, I'm still interested given the low relative & historical multiple.

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