Expensive is Relative
Every day I purchase a coffee at Starbucks for $2 and some change. And everyday I walk into work I am scolded by the "coffee club president" about the wastefulness of my ways.
To him, my $2 coffee is a disgusting display of my over the top opulence; my golden Ferrari one could say. However, to me, it's a solid investment (one of my best, damn you Mr. Market). Not only is my bourgeois palette not suited for the roach coach coffee of the peasantry, but it helps me start the day, and I enjoy my experience while purchasing.
I think if that if Mr. Coffee Club President was an investor, he would have his screener preset to stocks making new 52 week lows. And he would quickly discover that the weather forecast for his part of stock-town was a 99% chance of falling knives. I was fortunate enough to learn early on that a low price does not a value make.
I don't mind paying a premium for a company that I think deserves it. I've bought some stocks near their 52 week highs. Some worked out, some didn't, but I always tried to validate my decisions by making sure that the valuation for the company hadn't gone off the charts.
On the other side of course, are stocks like OPEN, VMW, et al. Who are the brave souls that set their screeners to stocks reaching new 52 week highs and PEs shooting for the stars?
And so this is my question? Is there value in these stocks that I am missing because I have become Mr. Coffee Club President? Are these stocks "expensive" only to me, or have they just overshot in general?