We don’t have any discernible edge determining whether IBM’s earnings are going to beat the Street by a nickel, or whether the multiple should be 16, 18, or 20. We don’t know where the price of oil is going or whether small-cap stocks are going to outperform large caps. These things are really unknowable and [...]
There are two kinds of events that create volatility, which creates opportunity. The first revolve around individual companies, such as earnings misses, unexpected news, M&A activity, restructurings and legal issues things that can make prices and valuations change relatively quickly. In general, prices change much faster than fundamentals of businesses change, so what we want [...]
We find that at times companies or even industries can trade at big discounts to their inherent growth rates because of the perception that the earnings are highly cyclical.