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Strategies & Market Trends : Value Investing
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To: Shane M who wrote (5321)11/23/1998 8:57:00 AM
From: jeffbas  Read Replies (1) of 78602
 
I think it is a lot harder than it seems through the rear view mirror to pick a stock with unlimited upside potential, especially in technology. Just look at CIEN which guru George Gilder mentioned in Forbes, and went from $92 to 8. Take MSFT which clearly has unlimited upside potential, but to what extent already reflected in the price?

I think the tenet of value investing is to buy a stock with much larger upside potential than downside risk, as measured by things you can quantify. Here, downside risk is often controlled by the company selling at close to what might be called traditional investment value, but not always. For example, I would have called JBL a value stock 2 months ago at $23.

I believe that it is a lot easier to recognize a value stock and achieve very good investment results over a long period than to pick
a Buffett winner and achieve his results. Our goal should not be to be superhuman but to achieve better results than an index fund, which beats 3/4 or more of funds itself.
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