Bill, if you can find cheap stocks where you can see the light at the end of the tunnel, and that tunnel is only a quarter or two long, God bless ya. Just hope you post them here too. I usually (not always) find that catalysts are very expensive. If I can see it, usually everybody else can too. Once in a long while, I find one where the catalyst is there but the stock is still sitting near its bottom. And I buy it.
So don't think our goal is to find very cheap stocks with no visible fundamental turn in site just so we can enjoy watching them do nothing for two years. But I assign value to catalysts too - sometimes that catalyst is overvalued, and sometimes its undervalued. Its what Buffett talks about when he says you have to think in terms of probabilities. And if you think in terms of probabilities, I would assert this: Those very cheap stocks with no visible fundamental turn in sight have some probability of turning much sooner than anybody thinks. What is the probability of agriculture stocks turning in 1999? I'd say about 25%. 50% in 2000 and 25% that we're in for some very long term frustration. What are the probabilities on oil prices turning soon? I have no idea, but I know its a lot more than zero.
I'm not quite sure what ticked Mike off, so I'll leave his statements alone. But I too get very annoyed when investors I work for decide they don't care what the valuation of a stock is if it has no visibility for the next quarter or so. Once that visibility materializes, the price is usually already up 25% or more.
Just my thoughts - they don't contradict what you said, only add a layer alongside it.
I also think that in a more normal market, we will better understand what Warren Buffett means when he ridicules the idea of thinking about quarters. I have no problem whatsoever waiting two or three or even five years for a double. There are so many investors out there who don't want to buy anything unless it is going to go up 50% in the next quarter. That is not reality, and we are going to miss an awful lot of opportunties for big two-three year plays if we too fall into that trap.
Thanks for the techy tip - I'll pass that along to our telecom/tech analyst tomorrow for a reality check. |
