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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (48494)	4/28/2000 1:19:00 PM
From: jbe	Read Replies (1) \| Respond to of 99985

Thank you for your response, GV. You are right, of course. I would add, however, that solid, Company A-type companies can be every bit as risky as cash-burning internet ventures, for example. Take a stock that I have in my own portfolio - Abercrombie & Fitch (ANF). ANF is the only stock I know of that has won an A+ grade from Morningstar in all four of its categories: growth, profitability, financial health, and valuation. Yet ANF is a full 80% off its 52-week high! Furthermore, I seem not to have made clear what I thought was my central point. And that was that the model we use to calculate value/payback time is based on the convention that we are "buying a piece of the company." Thus, it is important to calculate whether we are getting as much "return" from it as we would from a 30-year T Bond, say, or some other alternative investment. But the point is that we are NOT buying a "piece of the company." In the absence of dividends, we do NOT get ANY return. To get a return, we must SELL the security. So the only measure of return is price appreciation from the time of purchase to the time of sale. And price appreciation may have absolutely nothing to do with the conventional methods of calculating intrinsic value. jbe