Port Wren Capital, LLC
Finding Value InvestmentsSM
Beware of the next big thing. Another stock I'd avoid is a stock in a company that's been touted as the next IBM, the next McDonald's, the Next Intel, or the next Disney, etc. In my experience the next of something almost never is on Broadway, the best-seller list, the National Basket Association, or Wall Street. How many times have you heard that some player is supposed to be the next Willie Mays, or that some novel is supposed to be the next Moby Dick, only to find that the first is cut from the team, and the second is quietly remaindered? In stocks there's a similar curse.
In fact, when people tout a stock as the next big something, it often marks the end of prosperity not only for the imitator but also for the original to which it is being compared. When other computer companies were called the "next IBM," you could have guessed that IBM would go through some terrible times, and it has. Today most computer companies are trying not to become the next IBM, which may mean better times ahead for that beleaguered firm.
After Circuit City Stores (formerly Wards) become a successful electronics retailer, there was a string of nexts, including First Family, Good Guys, Highlands Superstores, Crazy Eddie, and Fretters. Circuit City is up fourfold since 1984, when it was on the New York Stock Exchange, somehow avoiding the IBM course, while all of the nexts have lost between 59 and 96 percent of their original value.
The next Toys "R" Us was Child World, which also stumbled; and the next Price Club was the Warehouse Club, which fared no better.
This is primarily sourced from Peter Lynch’s book entitled “One up on Wall Street” published in 1989.
Knowing what stocks not to buy is as important as knowing what stocks to buy. Knowledge in picking stocks is key to making above average returns. Contact us today, to learn more about how we find undervalued stocks.
At Port Wren Capital, LLC, we specialize in picking specific undervalued U.S. stocks using fundamental analysis developed by Benjamin Graham using a five step process. We have beaten the S&P500, DJIA and NASDAQ benchmarks since we started 5 years ago on our own investments. Discover the difference for yourself. To learn more contact us today.
GET EXCLUSIVE RESEARCH by Port Wren Capital
Investment Research ExpertsSM
Contact InformationE-Mail: Info@PortWrenCapital.com Phone: 803-415-1935
Copyright © 2013-2019 Port Wren Capital, LLC. All rights reserved. Port Wren Capital LLC logo, PWC Stock Reports, Finding Value Investments, The Contrarian Newsletter, and Investment Research Experts are registered service marks of Port Wren Capital, LLC or its affiliates.