Somewhere along the line, it got assumed that value investing requires shunning the tech stocks that receive the overwhelming of media attention. This assumption might be true for the value investors that only want to purchase current cash flows that are being sold at a discount. But I’ve always had a much broader view of value investing: it’s about locating the best risk-adjusted future profits at the best price available.
The issue with the stocks that have become media darlings is that there is no way to make the numbers work even if you adopt an optimistic view about future earnings and future valuations.
Take Facebook, for example. If hitting a low of $17 in 2012, the stock has flown straight to the $100 mark (most recently trading slightly lower at $98). You can find no shortage of analysts that recommend it. I could never do that. It is currently … Read the rest of this article!