Last year, II's picks were down 6% at about this time, but still ended up beating the S&P. II could say, "Just buy Microsoft," but then they wouldn't be telling you anything you didn't know. Instead, II is trying to pick companies on the threshold of greatness. Of course, this involves big-time risk and every year, some bombs are selected. On the other hand, II also nails a few winners which tend to make up for the losers. CMGI has just about doubled since II picked it, for example. In general, you have to (1) buy the whole II Magic 25 portfilio, because any one stock they pick has the potential to blow up in your face, and (2) give the portfolio time to prove itself.
On another issue, does anyone think the price drop and downgrade are really warranted? It sounds like LTBG just had some trouble collecting from one big client -- if they had collected, they would have had increased revenues. To me, that doesn't say anything about the overall quality of its business or its long-term potential. What does the analyst who downgraded LTBG give as his reasons?
Justin |
