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

To: Paul Senior who wrote (3610)	3/24/1998 12:28:00 AM
From: Ron Bower	Read Replies (2) \| Respond to of 78568

Paul, You'll have to admit that it's getting tough to find 'em. I keep coming up with companies that have great growth histories but don't seem to know where to go from here. Lotta cash, low debt, but a lot of competition, tighter margins, and management concerned about the value of their options. Doesn't occur to them to do some belt tightening and declare some dividends. Instead they'll buy back stock so the value stays high - for who? Or - they go looking for an acquisition. This way they can show revenue and earnings growth. We're supposed to ignore the big 'goodwill' number they put on the books. Ran 146 stocks last weekend, found 7 worth further research, scratched last one off the list today. I don't care what the market does, but I think it's more difficult to find value stocks at decent buy-in prices. IMO, Ron

To: Paul Senior who wrote (3610)	3/25/1998 10:02:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 78568

>>You have sliced and diced the data every possible way to come up with the statement "Stock prices are higher now that at any time in history no matter how you slice it."?? This is a fact or opinion?? How's about if I cut it as small cap value stocks circa 1963? Microcaps in 1969 perhaps? Airline stocks in 1950's??? Gold stock prices are higher now than ever before? You've checked all of these slicing possibilities and more??<< You make a valid point. However, when most analysts talk about market levels they are talking about stocks in aggregate. The S&P500 and the DOW are at the highest PE ratios for non-depressed earnings ever. In addition I have seen broader based indexed PEs that suggest very similar circumstances. (Nasdaq - 40x-50x , Value Line Expanded Edition 20x 3500 stocks). Clearly there may be some sectors that are not at all time highs. In aggregate though it is not close. We are in orbit. Bargains are an endangered species. >>We are in a two-tier market like the '60's. But instead of the nifty fifty we've got the nifty S&P. Money is being poured into these S&P stocks, and maybe is pulling money out of stocks that are iffy that is, where companies have something not so right with them -- characteristics of value companies! about.<< I agree that the S&P500 in aggregate is more overvalued than some other areas. But as I suggested above, the nasdaq and most other small caps are also very very high. >>Also a very germane article in theStreet.com today. One columnist interviews an analyst who apparently knows everything there is to know about Chase (the bank). Says they are overexposed to Asia and they are in denial about it -- hoping it blows over. The stock could crater -stay away. (I'm reconstructing all this from memory, but I think I got the gist right.) But then Cramer comes on with an article saying, yes the guy is right, nobody is better at the analysis... but so what? The stock is a bargain at the current price, the guy has been critical for years, and HE NEVER MADE YOU ANY MONEY. Is that you? Except you got it <<better. What you are talking about here is almost nonsense. It is very simple. If you buy a bunch of businesses for less than they are worth you will make above average returns over the long haul. (and vice versa) That these things occasionally take several years is of no importance. Cramer may generate above average returns (although I doubt he can do it without leverage) but he is generally a hyperactive trader who judges his results by the last 5 minutes. I judge by the end of the game - meaning years. That is the real test. If Chase has the problems that the analyst says, it will eventually be reflected in the price (lower). That other analysts and Chase itself have yet to recognize it makes for a great opportunity to sell it if you own it. (all assuming the problems really exist) The timing of the inevitable decline in price is impossible. I can assure you that Cramer does not know either. It will catch all but the most lucky longs. >>If you shake people out of buying and you're right and the market craters, you're a hero. And if you do scare people and the market rises or they don't buy these good companies that are available, you still >>win. This is all short term stuff (and in my view meaningless)