Interactive thread on investment-related questions

[Southie]

Re: Interactive thread on investment-related questions

@kakaballi

That’s what I am asking. Why do you believe that a stock with > 10b mkt cap and rock solid balance sheet goes ‘out of favor’? I would say several analysts would be following a stock with > 10b mkt cap and price would already have adjusted to reflect their assessments. Unless, of course, you are looking for less than market return with lower risk.

It is not my belief. It is real. Take large cap tech stocks in 2000. They were way way overvalued. By March 2003, they had fallen 80% on average. Was the market efficient in 2000 AND 2003? I don’t think so.

Those who bought beaten down quality tech stocks in 2003 did well. After Merck Vioxx scandal, it dropped to 22 with yield of 8%. Now it is at 45 abt 4 years later. You did great. Wasxmarket efficient? No.

Let us look at Pfizer. It was at 55 in 2000 I think with P/E of 40 to 50. Analysts were going gushing over its 30% growth rate. By 2009 it plummetted to 12. So those who believed these useless experts who “follow” these stocks got suckered. In 2009 no analyst liked Prizer. Patent expiration low growth rate etc were reasons given. Wrong again. It yielded 7% and is now at 26! Are big caps efficient? Of course not. There in lies opportunity.

Reason why I restrict to > 10B - those companies around 20 yrs. Bad news does come out due to coverage.