Considering DELL and MSFT...
 

Pros/Cons, other than the surface numbers?

Jesse

Re: Considering DELL and MSFT...
 

very poor choices.

Re: Considering DELL and MSFT...
 

Yesterday's superstars are today's dinosaurs!

Re: Considering DELL and MSFT...
 

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very poor choices.

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Why?

Re: Considering DELL and MSFT...
 

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Yesterday's superstars are today's dinosaurs!

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General question....Could you please elaborate on this?
Or more specifically....can you give us a fair estimate for DELL/MSFT's sales and/or profits 5 and/or 10 years from now (and thereby demonstrate why these stocks would be poor investments at today's prices)?

Re: Considering DELL and MSFT...
 

they are both good companies but you'll see your money underperform relative to the market......typically the leaders during one business(expansionary) cycle do not perform well in the next.

Re: Considering DELL and MSFT...
 

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Or more specifically....can you give us a fair estimate for DELL/MSFT's sales and/or profits 5 and/or 10 years from now (and thereby demonstrate why these stocks would be poor investments at today's prices)?

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I can't imagine that you disagree, that DELL and MSFT growth rates in the future will be significantly lower than they were in the past?

Re: Considering DELL and MSFT...
 

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Or more specifically....can you give us a fair estimate for DELL/MSFT's sales and/or profits 5 and/or 10 years from now (and thereby demonstrate why these stocks would be poor investments at today's prices)?

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I can't imagine that you disagree, that DELL and MSFT growth rates in the future will be significantly lower than they were in the past?

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Strawman argument. They don't need the same growth rate they had in the past to be a good value at today's prices.

Re: Considering DELL and MSFT...
 

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typically the leaders during one business(expansionary) cycle do not perform well in the next.

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I could come up with at least 5 rapid-fire examples of great companies that defy this. Then you could come up with another 5 that defy me, and we could go on and on.
What I'm requesting is that you back up your statements that these stocks are "very poor" investments with some sort of estimates of the companies' underlying value, or the stocks' implied yields, or something a little more meaty than the above quote.

Re: Considering DELL and MSFT...
 

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DELL and MSFT growth rates in the future will be significantly lower than they were in the past

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You're right. But how does this fact automatically make them poor investments today?

Re: Considering DELL and MSFT...
 

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You're right. But how does this fact automatically make them poor investments today?

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To clarify my comment, I didn't say that they weren't good investments today, just that they were dinosaurs; meaning that there are likely better companies with higher future growth rates that might be better investments.

I would be interested in any comments you have with regard to MSFT and DELL investments.

For disclosure purposes, I hold both MSFT and DELL in my Marketocracy portfolio, but neither at this time in my real portfolio.

Re: Considering DELL and MSFT...
 

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there are likely better companies with higher future growth rates that might be better investments

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My main point is that I'm refuting that insidiously widespread falsehood (which your post seems to indicate that you believe, at least to some degree) that "higher future growth rate" implies "better investment."

After all the many and famous academic studies which show that "glamour" stocks (i.e., stocks of companies with high growth rates) perform relatively poorly, I find it difficult to believe that there are still so many people who are willing to pay nearly any price for superior growth.

As for these two specific companies, yes their growth rates will be lower. Of course. But I would suppose that, at today's prices, a 50/50 mix of MSFT & DELL will be a better thing to buy-and-hold-for-5-or-so-years than (to name a faster-growing company that everyone seems to love right now (but I'm probably going to regret mentioning b/c it already gets too much airplay)) GOOG.

I based this last statement not on any in-depth company research (these companies aren't the types of things I buy, and I'm already too busy looking at other stuff), but on (1) a general sense I have of their relative price-to-value characteristics and (2) the fact that several smart value investors (Pzena, Tilson, Southeastern, et al.) have been buying them lately.

Re: Considering DELL and MSFT...
 

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My main point is that I'm refuting that insidiously widespread falsehood (which your post seems to indicate that you believe, at least to some degree) that "higher future growth rate" implies "better investment."

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ok, I see where you're going with this, and raise...

If I were to say that you could achieve roughly market average returns by investing in DELL and MSFT over the next 5 years, would you consider that a good investment and stop?

Or, would you say, I can do better than that and look for the better opportunities!??

(Note: I personally do not believe that future growth rate, in isolation, is a good determining factor of potential returns... for investment purposes, you clearly have to quantify the value you are getting today, for that future growth)

Re: Considering DELL and MSFT...
 

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If I were to say that you could achieve roughly market average returns by investing in DELL and MSFT over the next 5 years, would you consider that a good investment and stop?

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No, I'd rather buy Vanguard Total Market or something similar.

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Or, would you say, I can do better than that and look for the better opportunities!??

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I implicitly say this every day when I go to work as a portfolio manager.

Re: Considering DELL and MSFT...
 

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Or, would you say, I can do better than that and look for the better opportunities!??

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I implicitly say this every day when I go to work as a portfolio manager.

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That's what I was trying to say in my original reply [img]/images/graemlins/smile.gif[/img]