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Seansonfire (41.33)

May 2010



“Limited Downside Risk” - Fundamentals

May 04, 2010 – Comments (1) | RELATED TICKERS: FMR.DL , ANDV , WWE

People use the term “Limited Downside Risk” in way too many situations when talking about entry points for stocks.  I have probably done it as much as the next guy.  Mainly people state that a companies stock has limited downside risk because the public information available at the time, and the analysis that they have done around that information, looks good.  Be it a discount cashflow valuation, or a comparables analysis, the stock looks like there is no way that it could trade at any lower than it currently is.  Often these calls are made at stocks trading at a P/E of 35, which is outrageous to say.  A P/E of 35 would be a risky entry point with huge downside risk for most investors, especially value investors.  [more]

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