I was in a meeting a couple of days ago, discussing possible and likely investments in auto stocks. The clients I was talking to are pilots or ex-pilots and close to being pros in terms of financial awareness. At one point I noticed that all the attention was on the quality and the looks of the cars built by this or that carmaker. None was even considering if the prices the companies were trading at, were reflecting and discounting present or future profits. I tried to focus everybody’s attention on the fact that, it is not necessary to like the product a company sells, in order to invest in that company. Indeed I had a very hard time. The question is, are we capable of clearing our prejudices in such a way that we will be able to invest in a company even if we dislike its products? Take the recent Alx@xel-Lucx@x merger — If you have ever operated with an Alx@xel telephone you probably want to sell the company short, yet at prices below 10 and widespread bloggers bearishness, I was keen to like the stock with an upward bias (By the way are bloggers a good contrarian indicator?)

The point is not to pat myself on the shoulder because the stock is trading at 10.5. As I have often pointed out, I am always ready to recognize and talk about my mistakes, past and present.


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