Use access key #2 to skip to page content.

Dumbness

Recs

22

August 10, 2011 – Comments (4) | RELATED TICKERS: OGZPY , AAPL , INTC

Gazprom, OGZPY.PK, is back to a P/E of 4.  Europe must be planning to return to the dark ages, using coal to heat houses and tallow candles for light.

INTC is back to a P/E of 9, 8 after the cash is backed out.  I guess the world doesn't use computers any more; I didn't get the memo.

AAPL at $363, with the cash backed out, is rolling on a P/E of 13, with year over year earnings growth of 80%.  Go look at those numbers again - I did just now, with a calculator, because they're frankly unbelievable.  If you can find me any other company who put in 80% y-o-y earnings growth with a P/E of 13 and no debt, I'll buy their shares too.  AAPL's just entered a whole new market, CHL's 600 million wireless subscribers; they're growing at an 80% year over year rate; and they are priced with a P/E of 13 when the average S+P historic valuation of large and mid cap stocks, all comers, is closer to 16.  Those stocks grow at about 8% on average, year over year.

Selling stocks is one thing; getting dumb is another.  If all you care about is price movement, well, look out below.  If, on the other hand, you'd like to buy some stocks at a discount, this is a pretty neat time in the history of the world to do just that. 

4 Comments – Post Your Own

#1) On August 10, 2011 at 5:17 PM, ikkyu2 (99.14) wrote:

BWLD is cheap too, P/E 21 and growing earnings 26% y-o-y, opening plenty of stores, new one or two every week.  That is CHEAP, people.

Hey look, there in the bathtub, circling the drain - did someone throw out a baby?!?

Report this comment
#2) On August 10, 2011 at 6:20 PM, ElCid16 (96.01) wrote:

WMT, EMC, DLB, GLW, WM, GE, FCX, GES, SI, TEVA...they all look cheap, relative to the past 10-15 years.

They're not necessarily cheap relative to the past 100 years, though.  P/E ratios of 6-8 on blue chips and dividend yields at 5% on companies that normally yield 2-3% are cheap.  Will we get to that level?  Who knows...  But holding just a bit of dry powder for those potential valuations should be at the forefront of every investor's mind.  Remember ASH at 8, CAT at 35, and DOW at 10?  If a 2008esque environment again surfaces due to situations in Europe, I could see a lot of investors employing an "I've had it" sort of mentality after back-to-back stock market crashes in the past 3 years, and completely throwing in the towel.  That would seem to be the opportune time to buy.

Nibble at these prices, get the elephant gun out if things get worse... 

Report this comment
#3) On August 11, 2011 at 1:38 AM, Seano67 (33.96) wrote:

"WMT, EMC, DLB, GLW, WM, GE, FCX, GES, SI, TEVA...they all look cheap, relative to the past 10-15 years.

They're not necessarily cheap relative to the past 100 years, though.  P/E ratios of 6-8 on blue chips and dividend yields at 5% on companies that normally yield 2-3% are cheap.  Will we get to that level?  Who knows...  But holding just a bit of dry powder for those potential valuations should be at the forefront of every investor's mind.  Remember ASH at 8, CAT at 35, and DOW at 10?  If a 2008esque environment again surfaces due to situations in Europe, I could see a lot of investors employing an "I've had it" sort of mentality after back-to-back stock market crashes in the past 3 years, and completely throwing in the towel.  That would seem to be the opportune time to buy.

Nibble at these prices, get the elephant gun out if things get worse... "

 

Bravo. Great point. Can't really stress enough the importance of always trying to keep some dry powder in reserve, cause things might get a whole heck of a lot worse before they get better again. I didn't get to participate fully in the 2008 bargain fest because all my cash was tied-up and I had no dry powder with which to invest, and I have been kicking myself for missing that (what I believed to be a once in a lifetime opportunity) ever since, so I have resolved to never be in that position again and to always have at least a bit of discretionary cash available if some extraordinary bargains should become available again- and in the meantime I carefully and slowly nibble as I see fit. 

Report this comment
#4) On August 11, 2011 at 12:23 PM, VExplorer (29.64) wrote:

+1rec to ElCid16

Report this comment

Featured Broker Partners


Advertisement