jdoe
08-22-2005, 03:49 PM
Well first let me say that I followed the market for about 10 years and I still learn something every day. When people say the stock market is a good place to invest your money in the long term, I do tend to agree. The stocks that will still be here in 10 years will give you excellent returns over that time. But I have started think about all the ones that have/ will fall along the way. I can confess that I was shareholder of ATHM (@ home) when it was about $50 a share. I consider myself lucky to have pulled a very small profit out of this holding before it crashed and burned. But I remember thinking that the cable modem business was an easy winner. I owned a cable modem. I liked it. My friends were getting them and they like it.
Now had I gone short here (or bought puts) I would have pulled off a monster return. But at the time the idea of cutting off a finger sounded more appealing. I have started to wonder, are there more bad overvalued companies out there than good undervalued ones?
I am starting to think so.
Why?
Look at all the money in the stock market. I would say that most of it is in long positions held by mutual funds in 401K’s / IRA’s (Now I don’t know this I am just guessing here ) So that means there is a lot of irrational buy pressure in stocks. The money has to go somewhere right? So what does everyone look for?
Undervalued. Earning potential. Growth. Etc.
I can’t see the logic in a stock that trades at 100X earnings (or may not even have any earnings) that is working on the cure for cancer and AIDS or claims to be 2 years from selling nanotechnology to my grandmother.
Just my .02
Jdoe
Now had I gone short here (or bought puts) I would have pulled off a monster return. But at the time the idea of cutting off a finger sounded more appealing. I have started to wonder, are there more bad overvalued companies out there than good undervalued ones?
I am starting to think so.
Why?
Look at all the money in the stock market. I would say that most of it is in long positions held by mutual funds in 401K’s / IRA’s (Now I don’t know this I am just guessing here ) So that means there is a lot of irrational buy pressure in stocks. The money has to go somewhere right? So what does everyone look for?
Undervalued. Earning potential. Growth. Etc.
I can’t see the logic in a stock that trades at 100X earnings (or may not even have any earnings) that is working on the cure for cancer and AIDS or claims to be 2 years from selling nanotechnology to my grandmother.
Just my .02
Jdoe