Tag Archive for 'Market'

Valuation Matters; Therefore, The Stock Market is Wrong! February 27th, 2009, By ChuckC of TheMarketsUpChuck.com Part 1 of 2 focuses on stock market valuation. Warren Buffett once lamented that For some reason, people take their cues from price action rather than from values. The dumbest reason in the world to buy a stock is because its going up. And Peter Lynch of Fidelity Magellan fame said in his New York Times bestseller One Up on Wall Street Just because you buy a stock and it goes up does not mean you are right. Just because you buy a stock and it goes down does not mean you are wrong. Both of these renowned gurus are acknowledging the undeniable fact that the stock market can often grossly over or under value a company. During the irrational exuberant period of the late 1990s the market was overpricing stocks to the extreme. Today, the stock market is undervaluing stocks to an opposite extreme. As overvaluation was the precursor to horrible long-term results, todays mirror image is the beginning of a great long-term opportunity. Valuation and earnings growth are the true determents of future return. Watch our Frat™ Videx™ for the compelling and undeniable evidence! Ultimately the owners of any company, public or private, will derive their economic reward from the cash flow the underlying business generates or earns. Therefore, determining risk and reward is truly a straightforward and simple exercise. You merely forecast the income you expect and measure it against …