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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (2552)11/28/1997 9:19:00 PM
From: jeffbas  Read Replies (1) of 78634
 
I think there is a lesson to be learned from Ray's points - If you are looking at two stocks which are nearly identical in every way, then you should closely examine the expected probability of deviation from the future earnings estimates. I have seen lots of so-called growth companies selling at low multiples of next year's projected earnings where I have gotten burned because I did not properly consider the chances of them missing the estimates.

In particular, all commodity type businesses, whether it be steel, eggs, disk drives or semiconductors have a much greater chance of not hitting earnings estimates than other companies, which is often not reflected in the P/E.
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