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September 30, 2008

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Adam

Other than being in-expensive, it could be another sign that investors believe that consumers may start moving into a saving, rather than spending, mode.

David Jarvi

I worked on a stock exchange once.. and I can assure you... there is smart money and there is dumb money. The 'investor class' is mostly dumb/slow money and is normally the person left to 'pick up the tab'

Buffet's Annual Letter to the shareholders is the one of the best places to get an education of a real investor ( not a Casino investor) Check out a 10 year chart on S&P/Dow Jones/etc.. a traditional buy & hold strategy would have made you NO money.

In the coming year, it seems like CASH will not only be King, it will be GOD! and thus.. those companies with CASH are the ones I think will make the best investments going forward

Bill

Response from Bill:

I agree there's a lot of dumb money out there. But I think it is usually accompanied by some sort of rationale, however ill-advised and poorly reasoned. Agreed, there are some big exception areas--a lot of stock is bought based on the inventory levels of the brokerage houses. That's still driven by a rationale, only the logic is transparent to the ultimate buyer.

My point was that people bought up Campbell's for a reason. Good reason? Maybe not. But understanding this reasoning gives us some insight on buyer behavior in a very down market.

Totally agree with the comment on cash. Especially with the credit crunch. Every company with strong cash reserves, after tending to their survival, should be hunting for the acquisition and capital investment deals that are going to be everywhere in the coming year. It's the most leveragable competitive advantage in today's market.

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SagePoint Consulting

  • Bill Aho is a partner with SagePoint Consulting, which uses proprietary innovation processes to create products, services and concepts for businesses. SagePoint serves as an ongoing revenue-producing engine for companies, generating a steady stream of market-driven innovations that are financially attractive, operationally sound and built on strategic growth platforms.

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