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Value traps

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May 01, 2011 – Comments (12)

if you went to a steakhouse, and a normal filet mignon cost $110, but they had one that was decayed and disgusting looking and tasted liek crap, but they were selling it for $20, would you consider it a bargain and buy it?

If you answered no, then I hope you clamor over CSCO, MSFT, BBY, SKX, etc

 

Also, unless a company is in serious possibility of bankruptcy, why do people feel the need to analyze the quick ratios curent ratio blah blah blah

12 Comments – Post Your Own

#1) On May 01, 2011 at 4:03 PM, Valyooo (99.47) wrote:

I meant to say hope you don't

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#2) On May 01, 2011 at 4:46 PM, BlackSwanCapital (52.37) wrote:

I'm not so sure CSCO or MSFT are dead/dying.

BBY I would avoid because I feel big box stores are on the way out - I mean Toys R Us started that "type" of specialty retailers, and was followed by Bookstop, Barnes and Nobles and Borders.... which are all going kaput so I'll give you that - especially with the advent of digital distribution.  

 I think Ultralong still thinks of BBY as a value play though.  I'll have to ask him what his thought are and why.

As for SKX, I've never been particularly fashionable so I won't venture to guess whether consumer sentiments will shift back.  Maybe NIKE will start selling rocket boots.

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#3) On May 01, 2011 at 4:47 PM, BlackSwanCapital (52.37) wrote:

+ rec though.  Thought provoking.

What's your case for CSCO/MSFT?  I always (still do) which MSFT would spinoff X-box.

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#4) On May 01, 2011 at 4:48 PM, BlackSwanCapital (52.37) wrote:

which = wish

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#5) On May 01, 2011 at 6:16 PM, HarryCarysGhost (99.70) wrote:

Why on earth would you pay $110 for a steak? I could grill up some tasty chops and with the fixins it might cost twenty bucks.

MSFT/CSCO are both widows stocks, not gonna move too far in either direction. There is a sense of security with the steady stock price and the dividend.

And yes I know your kicking my ass, I got till Sep.

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#6) On May 01, 2011 at 6:42 PM, MegaEurope (21.46) wrote:

SKX rallied 700% off of their 2008-2009 low, BBY 100%, MSFT and CSCO 80%.  Obviously, at the right price they are not dead money / value traps.  The trouble is most people over the last 10 years haven't paid good prices for them.

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#7) On May 01, 2011 at 7:29 PM, Betapeg (< 20) wrote:

Also, unless a company is in serious possibility of bankruptcy, why do people feel the need to analyze the quick ratios curent ratio blah blah blah

The higher the current ratio, the more likely the company is a very good value stock candidate. I have often found that a current ratio screen where the highest ratios (outliers are taken out) are ranked at the top gives great value stock picks (never without further analysis of course). It's a great screen. 

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#8) On May 01, 2011 at 11:28 PM, ElCid16 (94.38) wrote:

The same could have been said about JNJ during the 1970s.  That's a $20 steak I would have loved to get my hands on...

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#9) On May 01, 2011 at 11:45 PM, Valyooo (99.47) wrote:

How is that the same?  I meant to type AOL, not MSFT (havent slept in 2 days).  AOL losing market share, along with the others I listed (MSFt actually applies to).  Hows that like JNJ?

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#10) On May 02, 2011 at 2:41 AM, thecherryz (91.10) wrote:

Rec for first paragraph, although i disagree with your choices of value traps, it was still a good read.  To the second part: no clue....

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#11) On May 02, 2011 at 3:56 PM, tenasi (68.85) wrote:

At the right price, any of those could be a great value.  Time will favor the true values and they will rise to fair value.  You  can't stay short forever......of course at CAPS you can but this isn't reality.

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#12) On May 02, 2011 at 4:03 PM, tenasi (68.85) wrote:

and BTW, Don't tell PLynch Jr. that BBY isn't a great value right now.  He has been around here since 2006 and has a higher score at 99.9

 

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