This is not about General Dynamics, Paul, however, your post ....
Message 25813436
... and your following comments refer ....
"Value Approach Can Leave You With Dregs"
Best that I can say is that this William O'Neil IBD author's article takes a somewhat different view of, and approach to, stocks from mine, -g-:
finance.yahoo.com
And Dale Baker’s reply contained in ....
Message 25813466
“IBD always finds infinite ways to rationalize momentum investing. The herd chasers love it.”
And I don’t believe that the IBD article is centered on “Momentum Investing”.
I’d say it was based more on the ability of a company to produce ongoing and improving Bottom Line which is reflected in Earnings.
So it seems that the emphasis of an investor’s stock scrutiny should be directed at the Income Statement rather than the Balance Sheet’s Book Value.
Shouldn’t it, Paul, be about increasing top line Revenue and how much of that Revenue, efficiently, finds its way to Net Income ?
And here’s an extract from that IBD article...
“Book Value Is Liquidation Value.
You may see a buy recommendation because it's trading near its book value, defined as total assets minus intangible assets (such as patents) and liabilities.
Talk about a pessimistic approach.
All that means is if the company goes under, its assets can be sold off, bondholders paid off and there'd be enough left over to cover your buy-in. You can do better than that.
Book value reflects the cost of assets when they were purchased -- that could be decades ago.
Besides, in 21st-century America, physical assets mean less than they did in the prior century. The industrial revolution is over. Plant-and-equipment companies make up a smaller percentage of the economy than at any time in modern history.
No one cares what a company is doing today. When pricing a stock, the market looks at what the company will be doing in the future.”
Before one ridicules or dismisses an observation of others I’d say it would be prudent, and sometimes in one’s own interest, to interrogate its veracity and logic.
No point in sticking with a strategy, year after year, if it doesn’t consistently reward you with Capital Gain. Can you honestly say that a “Book Value” approach has done that ? |
