The Mad Hatter Valuation And Discussion of IBM Stock

If it weren’t for oil stocks, as well as my recognition that there are quite a few companies with superior growth rates worth mentioning, I would spend a lot of time talking about just how cheap IBM has gotten in the past two years (and also bring home the point that Benjamin Graham, David Dodd, and Warren Buffett were right when they said that true value investing is not something many people are going to be able to practice in real life because companies can remain cheap for quite a few years, and heck, Abbott Laboratories spent most of the 2000s trading at a discount before the rapid rise in the value of healthcare stocks at the same time that Abbott Labs was spinning off Abbvie). Buffett, personally, chose to get around this point by owning operating companies that gave him regular profits to invest in the stock market, so that stocks acted as a place for him to inventory his profits from his main business. In my writing here, I get around this tendency by focusing on companies that pay a dividend (preferably one that grows every year) so that you at least get paid to wait for the stock to reach a fair price and can benefit from the added wealth that results from reinvested dividends at low prices.

Continue Reading!