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Originally Posted by FTPdelaysuck
Najor, sometimes even if someone is not fully qualified to analyze a company from a financial perspective they will have something to offer to the discussion.
Yes, but I don't see how that's pertinent to a value discussion. Same is true for growth stocks, IPOs, distressed firms, BK, restructurings, mergers, so I hope they share regardless!
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Also since most of you guys are a bit younger than I am (I'm in my early 30s), and assuming many of you are in your early 20s -- you will see the world very differently from me.
When I was in my early 30s I was working at Lehman, and I haven't worked there for several years now. I do agree that for the most part a 22-yr old -- even a very smart one -- will have no idea what a 'value' stock is, how to find one, analyze one, evaluate its merits and drawbacks, relative to market, industry, other parts of the capital structure, and etc. Half the professional managers I know can't do it accurately either. It's incredibly hard.
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For a discussion like this to work, all you need is to have smart people who are passionate about investing/learning about companies (hopefully with different expertise, background etc) participate .
Disagree, love to be proven otherwise. I'm all for hearing about awesomely undervalued stocks that I don't follow.
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Part of the reason that stocks can be "mispriced" is that Wall Street often has the same perspective on things...
This is sort of a silly trope - for every buyer there's a seller. QED. To think you, or anyone here, knows 'what Wall St is thinking' is prima facie absurd.
I can't think of a single, solitary security on Wall St where even 80% of participants have the same opinion -- not the USTs, not the USD, not Apple, not Lehman debt, not MBS, not prime ABS, not commodities, not China, not EUR, not Japan or Brazil markets, not banks, not anything -- much less a single equity.
You may be confused by hearing on CNBC what a firm's 'strategist' says, or their equity guys say "Oh, we love LULU," but that's completely meaningless and no one pays any attention to it. Researchers and strategists and traders that have consistently demonstrated their ability to find alpha get snapped up by HFs, and eventually start their own: see Steve Mandel - went from regular analyst to top-ranked sell-side analyst to Tiger Mgmt to founding Lone Pine. There's an endless list of guys like that in all parts of the market - Richard Perry, David Shaw, Eric Mindich, Chase Coleman, ad infinitum.
He can find alpha and make hundreds of millions on his own picks, the sell-side guy at, say, Jefferies cannot. And the vast majority of research no longer comes from WallSt anyway, both due to the democratization of information on the Internet, and for the reasons listed above.
Nobody talented stays at a Big Bank and hopes their boss pays them $1, 2 even $5m a year when they can make 2 & 20% at a buddy's HF, or open their own. Even if it takes them a couple years to raise real money, most people with alpha-capturing ability prefer to work for themselves after a few years on Wall St.
Going back to my earlier example of PLOW, I think it is very cheap, but no one at 2p2 is likely to have helpful, actionable information on it that sheds light on the degree of its 'valueness.'