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Pastimes : Home on the range where the buffalo roam

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To: John Koligman who wrote (13743)	6/15/2005 1:16:28 PM
From: CFA	Read Replies (1) of 13815

<<I saw Lizzie's comment on the 1k for Google, put me firmly in the skeptic column. If Google gets a 300 billion valuation I'll eat my hat.>> Someone should bookmark that "GOOG at $300 is a long-term buy & hold" post, as it will likely provide comic relief in a few years. The value spread between GOOG and YHOO has widened to an extreme. Even if you believe that the markets GOOG serves will continue to explode, I'd rather play YHOO. Better yet, the best trade might be to go long YHOO and short GOOG, betting that the spread between the two will narrow (Disclosure: No position in either GOOG or YHOO). In any event, John Hussman--who estimates GOOG's true value to be in the $30s--wrote a commentary last weekend that offers a good explanation of GOOG's current valuation as well as overvalued stocks in general. Hussman's explanation can also be extrapolated to stocks hitting 52-week lows. hussmanfunds.com Basically, a company reports a good/bad quarter and gets taken to temporary extremes, based on false extrapolations that these temporary results will continue indefinitely. It's why I focus on stocks that are largely written off and trading at multi-year lows. The strategy worked with NOK @ $11, PFE @ $23, BBI @ $7, WDC @ $7, and many others. Hell, even MYG ended up working out.

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