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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (28403)	5/22/1998 1:00:00 PM
From: Michael Burry	Respond to of 132070

Oh, I know. As I wrote on the dellhead thread: Ah, but only in the best of times, like a 15 year bull. Invested your money in the top stocks of 68 and you saw your real level of inflation-adjusted assets come back to breakeven around 85. Disney and other well-known companies lost 80-90%. The PE on the DJIA fell to 6. 15-20 year droughts do occur. The 1929 crash saw real assets approach break even again in 1955. Imagine an age where people just don't care that a company is growing 3X it's PE, or where debt-free large caps sell at half their net current assets because people want anything but stocks. Granted, most of the time you needn't worry. But at certain times you certainly should. Right now has all the hallmarks of one of those times. If you were in semis in 96, you started to get this feeling. 6 times earnings with no debt and a wad of cash. Hence how you say the bull is rotational. When I look around though, I examine where all the really high priced stocks are. In the S&P 500, yeah, but the S&P is up out of proportion to its components due to the way it is weighted. Same with the Dow. Take a hop skip and jump out of Wall Street's eye, and there is a minor wasteland of stocks that have not been doing well (in many cases, have been doing horribly) and appear to be undervalued in not just the relative sense, but an absolute one as well. In an article for Microsoft, I took to examine the value of Berkshire. Lo and behold, I got 69000, right where it was trading. Looking at it from Buffett's point of view, I can see how he says many of these stocks have no margin of safety. But IMO he means no 30% discount. He doesn't necessarily mean overpriced, but possibly just fairly valued given a perfect outlook. Good Investing, Mike