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RVB's Market Musings

What began here as an avenue to interact and learn has far exceeded those goals.

If you are a prospective employer, please consider this site a place where you can see my passion for investing...

Sunday, July 16, 2006

Barron's = Public Disservice

Upon more investigation into the aforementioned Barron's articles, I found this to be entertaining:

"...Apple's stock is cheaper than it has been for a long time. It's changing hands at about 25 times the consensus estimate for this fiscal year's earnings...Although a price/earnings multiple of 25 may look steep compared with the
broad market's 17, it's reasonable in view of the company's growth prospects: The consensus is for earnings growth averaging 20% a year over the next five years."

Then in the very same magazine, another writer puts the following logic to keyboard (keep in mind that Panera will grow earnings at least 25% this year, and more likely closer to 30% annually for a few years to come):

"...EVEN AFTER ITS recent selloff, Panera fetches a lofty 31 times '06 estimated earnings..."

So, 31 times forward earnings is expensive for Panera, but not Apple? But, Apple is expected to grow slower?

This is where publications confuse investors who are trying to learn this game. We're not doing a service to moms and pops out there, we're doing a disservice.

Yeah, Apple and Panera are in different industries...and we could talk cashflow...yada, yada, yada. The point is that there is so much mumble jumble out there, we're better off NOT paying attention to it and thinking like Peter Lynch instead (BTW - if you click on that link, buy that book because it's perhaps the best investing book ever written - and I don't get any kind of royalties).

Maybe I, like Mr. Lynch, have never met a share I didn't like. Shrugg...


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