Posted by alex in Financial Column, George Lenz at 3:33 am |
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By George Lenz
How to value a stock? This question has a significant practical meaning: correct stock valuation leads to successful investment, and eventually to significant realized gains. Yet it is not an easy question: there are thousands of books and articles written on the topic, and what is cheap for one investment specialist is often expensive for another. Yet some long-term trends persist: stocks are valued today under more optimistic rather than pessimistic scenarios, every potential profit opportunity is adding to the stock’s value, even if prudence requires to disregard it, and lower return is accepted as normal or appropriate. Some cynics say that the analysts and stockbrokers are simply using every opportunity to increase the price of stocks they sell to the American investor.