Hi David, to do justice, your logic is not foreign to me. As recent as 9 months ago, I was a solid value investor. In fact, even now, my mutual fund portfolio has a solidly 50% value funds. And, even though I ve 35% cash sitting on the sideline, I ve been accumulating value stocks.
I cannot speak for others, but unlike some of my friends, who go whole hog into growth, I am definitely a chicken little who like values :). Having said that, "value" has not been kind to me, as recent as 9 months ago, in the span of three years, my stock portfolio has reached a 50% loss on cost basis! It is my late conversio by moving some of my $ into growht, that is instrumental in saving my sorry hind!
My point? I cannot speak for others, but I think I was trapped by my own rigid thinking. In truth, the whole stock market has been way overvalued, by traditional yardstick, when the Dow hit 4000! But then, how many fund managers got fire if they sat out then. Maybe it is a great fool theory, but I don't think there is an absolute out there. Rather, one should be able to spread one's money around. Some value, some growth and some cash. If one is adventurous, add a bit of aggressive stock to spice things up. If one is cautious, save some cash. 5% in Money Market is still a nice return, you know.
It is interesting you brought up CSCO and NT as mature cos vis a vis small stocks. If one is to examine these "mature cos," they have one thing in common with their smaller relatives, unlike the old conglomerates, they move fast. It is my belief that LU will have to change its strip too.
As far as BCE's spinoff of NT, I do not think your reasoning is what Mr Monty has explicitly stated. Plz don't misunderstand me, you could be right. However, it is doubtful that BCE would want to sell NT if BCE stock appreciated on the par with NT - and if institutional holders didn't make a big fuzz about it.
I really don't know what the future holds for great cos like CSCO and NT, if they don't major mistakes. It is likely that they may reach a plateau. Actually, CSCO is a steady climber. So, it has already moved into the state. While NT is catching up, one should be mindful that she was unnecessarily punished b/c there were too many doubting thomases out there when she acquired BAY. Hopefully, there are still doubting thomases like yourself out there to keep the co on the toe.
Finally, as far as Uncle Al is concerned, obviously, if he were to bungle the softlanding this time, the stock market would suffer. However, my guess is that if it happened, many small caps would suffer worse fate - especially those not in the tech areas who could not attract hot money. Regardless, I do not think NT would hurt more if that happened.
If you think NT is a $40 stock, you will profit handsomely if you short the stock. However, my personal feeling is against the impulse, at least for small investors. Hedge funds can certainly do so, but they are likely to have hedges and they have deeper pocket. Well, I am rambling, so maybe a good time to stop :)
best, Bosco |
