Security Analysis and the Future
Since we have a little tug of war (outside this thread mainly) which involves the tension between fundamental analysis and speculative analysis, I thought I'd post a bit from "Graham and Dodd's Security Analysis":
"Estimated values are, of course, based on expectations. These value expectations are most reliable when a company's record represents a reasonably reliable guide to the future. In this regard the analyst's approach is diametrically opposed to that of the speculator, who is seeking to cope with highly uncertain future developments in which the past is not a reasonable guide to the future. Analysts treat the future as a hazard which their expectations must encounter and attempt to guard against." [Ch.9, p.127, 5th ed., McGraw Hill]
I bring this up because CYI is in my view a transition situation where the past is not a reasonable guide, or at least the record of the past is mitigated by what I regard as the unfolding of an essentially new company. The cross-currents in discussion of the firm result, I think, from two contrasting perspectives. One looking back and one looking ahead. While this tug of war plays out, we should expect to see the backward looking tension result in the selling of shares. While it is easy to have strong convictions in a rising market, only the normal and periodic downdrafts serving to test support will help us know the genuine base of CYI as it is becoming today.
While I count myself as a 'speculator' in this context, I do so more with reference to the original Latin root of observer rather than the colloquial usage of gambler. But, hey, it was more than 100 degrees most of the afternoon and I couldn't hang out by the pool. |
