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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (16437)	2/15/2003 10:58:22 PM
From: cfimx	Read Replies (1) \| Respond to of 78671

>>"Capital intensive" means lots of debt, increased risk, lower profit margins, and lower valuations. as a rule yes. But it happens to be the place where the very best businesses hang out, according to a Mr. Buffett.

To: jeffbas who wrote (16437)	2/16/2003 4:35:59 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 78671

there are so many things completely wrong with your argument that it's not even worth discussing, especially on this thread. i don't know how i could look at stocks like LLTC and DELL as great values, except that they have been great shorts for me and i thank god people keep paying ridiculous prices for them so that i can keep taking their money. but that is neither here nor there on this thread. the more interesting question for me, and i think most thread participants, is the extent to which the unwinding of the greatest bubble in history in the late 90s will have an effect on value stocks. although many value stocks did not achieve ridiculous multiples during the bubble, their businesses have to deal with the aftermath. history shows us that every bubble gives back every excess that was won in the bull period, and ends up with trough valuations the lowness of which is commensurate in amplitude to the bubble peaks (though the direction is opposite). GMO did an exhaustive study of 40 past bubbles throughout history and there was not one exception to this. for a variety of reasons, i am convinced that the trough valuations we will see in the next decade or two will rival those of the 70s. it is as natural as night follows day. this is why it is interesting to consider some of the valuation issues i brought up. feel free to ignore these issues, and also to ignore me. but do not make silly arguments about market cap to GDP (which was safely within the historical average range in the early 90s, at around 55%, only to more than triple from that level during the bubble) not mattering because of the New Economy. imho, it seems you are just shooting from the hip without understanding the historical context.