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

To: jeffbas who wrote (7172)	5/17/1999 2:11:00 PM
From: Bob Rudd	Respond to of 78464

Jeffrey: <<note my point, however, about lows put in over long periods of time (or highs). That gets away from any particular point in time.>> I repegged my chart converge CSE, NH, & AG with Deere 3 months ago. At that point the lows of all four converge for a period. But the prior 2 years+ then shows that CSE, NH, & AG were far more highly valued than Deere. I thing the lows reflected the markets unwillingness to take down a premier name and nuclear-winter pessimism for the ballance of the group...especially AGCO. By contrast the year ago period, while off the highs, looked like it represented an equilibrium period where the group danced together. This is the situation I feel we're going to return to. Farm prices and world economies will recover and this will be reflected in the valuations of these companies..our original thesis on the group. <<Of course you should also use traditional measures of value like book, earnings, and sales >> Definitely agree on using traditional value measures, though averaged figures for earnings should probably be used rather than more recent shock-induced data, if the thesis of return to normalcy is basis of strategy. Incidentally, I see the pricing of this takeover as validation of that return to normalcy hypothesis, though completely agree with your assessment that NH overpaid. <<although many would argue that the stock price data reflects that>> There are times when EMH has it right and times when overreaction, animal spirits, and Mr. Market on a bender is a more valid perspective of price data. Period of highs and lows more often tend to reflect the latter, IMO.