11-10-2010, 10:23 PM
(11-10-2010, 09:33 PM)thinknotleft Wrote: I beg to disagree with you on avoiding investing in commodity business. I believe that given a sufficiently low price and shareholder-friendly management, it is worthwhile to invest in a commodity business.
Hi there,
I did note that you adopt a value-oriented approach to your investing, as I've visited your blog before.
But maybe you can explain in a little more detail - why do you think commodity-type businesses are worth investing in? When you mention a "sufficiently low price", I think you have to clarify if you mean "low valuations" or "low absolute price".
My take - valuation (i.e. PER) may be low for the business because of its commodity nature and its inability to maintain pricing power over its competitors. Hence, the market accords it a low valuation as its growth potential may not be very high.
Interested to hear your views on this, thanks!
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/