I thought that the PRIMARY Objective of a company was to make a PROFIT ? No doubt you're right (for many companies, anyway – don't forget the "unicorns" though! ;-))
However,
It's price has previously declined for 3 years and has been going Nowhere for the last year. Here I disagree: the "last year" its price has gone from ~ $7 to $17 (LTM) or ~ $11 to ~17 (YTD).
All depends on the time scale.
I'd personally prefer to get in at the bottom floor, than wait for the trend to be very clear. Once the trend is clear, many people want to get in. Often, that is the time when it reverses. When everything is sunshine and laughs, and nothing can get better, the first piece of bad news comes, and just after the last pessimist joins the party, the first optimist to become a pessimist leaves it.
Second level thinking. The different between decent or bad returns (the result of first level thinking), and good/great ones. The first one to say, "hey, maybe it's not so bad after all", will profit greatly if others agree, and the profit turns around, leading to still more people starting to agree, in a "virtuous" circle.
Not saying I'm right though. Haven't done any research at all, I just like the price graph basically. (So very small position, obviously.) We'll see who's right in a couple of years!
***
Moody's: with p/e of 34 on record earnings, a heck of a lot needs to keep going right (and nothing wrong) to justify that price. W/ that said, Moody's have a great business. They can be as incompetent as they wish, and still attract business. (Their profits didn't even go negative during/after GFC! How the hell is that even possible!) As long as they put their seal of approval on everything, and have a cartel understanding w/ S&P, they should be dandy for another 34 years. If we don't have a GFC with harder landing, that is. In that case, the financial industry might be drastically reduced, as people need to stop spending money like it was worthless (which it arguably kinda is), and stopped to think about the need for, say, consultants. Or trigger-happy ratings agencies who'll approve anything, as long as the approvée pays. |
