A Good Run Doesn’t Mean a Stock is Too Expensive

A quick note on FactSet (FDS). This is a good reminder that just because a stock is up doesn’t mean it’s too expensive. FactSet was on last year’s Buy List and it rose 37.2% making it our second-best performer. I decided to keep it on this year’s Buy List and it’s up 20.6% so far, again our second-best performer.
Also, just because a stock is down doesn’t mean it’s cheap. I’ve often heard people say, “how much lower can it go?” The answer is, a lot. A whole lot. I remember my finance professor explaining how low zero is. A $100 stock can drop 90%, then another 90%, then another 90% and it’s still not at zero. In fact, it can drop 90% infinitely and still not be at zero. Zero is really, really, really, REALLY small, and that’s how low it can go.

Posted by on June 20th, 2007 at 9:53 am


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