From: Peter C. McCluskey (pcm@rahul.net)
Date: Mon May 26 1997 - 09:55:59 MDT
maxmore@primenet.com (Max More) writes:
>Of course, but if you don't yet have enough money to diversify, the next
>best thing is to pick one very safe stock. Given the markets still opening
>to Coca Cola, I think it's a very safe bet. I intend to hold the stock for
>many years.
This basic idea makes sense, but it is important to base your belief
that it's a safe bet on something other than what other investors are
currently thinking, or you will generally end up buying fads. Personal
knowledge of the quality of a company's product/service/technology is
usually the right kind of approach to picking safe long-term investments.
Your attitude towards Coca Cola sounds more like something you have
picked up from popular investment ideas rather than independent analysis.
It may be very safe to bet that Coca Cola's earnings will continue
to grow around 18%/year, but at a price/earnings ratio of 47 I would
say that the market has already discounted 8-10 years of this kind of
growth. Most earnings forecasts more than 5 years into the future are
worthless.
-- ------------------------------------------------------------------------ Peter McCluskey | | "Don't blame me. I voted pcm@rahul.net | http://www.rahul.net/pcm | for Kodos." - Homer Simpson pcm@quote.com | http://www.quote.com |
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