Okay, I apologize for the meaningless remark -- it wasn't my intent to be insulting, and I regret that it came out that way.
As I said before, I think that this sort of fundamental analysis of companies is very useful, but what constitutes fundamentals (at least in my opinion) has to depend on the company and the industry. Software companies tend to have almost no tangible assets other than cash. MSFT is valuable because they have a lot of smart people and a monopoly, not because they have a big bank account. Oracle doesn't have a monopoly, but they have a business strategy that makes more sense to me otherwise, and so I bet on them because of that.
I actually agree with you that even if Oracle's business succeeds the stock price could drop as a result of changes in public sentiment, and I do try to take such things into account, but I find it very hard to do so effectively. Most of the money I have I made in the bubble market, and I took out a significant fraction of my assets and put them in cash and gov't bonds because I couldn't make sense of stock valuations. At some level I still can't, because as I have said before, the only sensible definition I can come up with is using estimates of discounted dividends going forward (plus any payout from the company's dissolution), and by those standards I can't find anything to buy.
So I admit that I'm going by the seat of my pants on Oracle and the few other companies that I own right now, and I do it based on my assessment of the risks and rewards for the their business. And I do try to keep in mind some of the issues that you mention, but I can't figure out how to do it quantitatively and get an answer that I believe. It's possible that this means that I'm kidding myself -- and I don't ignore this possibility -- but for the time being I'm assuming that investor sentiment won't change fundamentally (above the change that took place when the bubble burst). |
