Warren Buffet often jests about his boring investments. The eight companies we focus on at Blogging Stocks were chosen based on investor interest -- not because they are the best ten stocks to own.
In some ways that makes them the un-boring set. I started to wonder if they could be ranked by their "boring factor," and just for fun, decided to track them periodically to see how they do in this regard. Naturally this is quite subjective so I'll explain my rational with each ranking from most boring to the least. The share prices are from the Friday close, August 25, 2006. The price-to-earnings P/E ratios are trailing figures. Here are the Blogging Stocks eight:
- General Electric (GE) $33.84, P/E 21.52: GE is huge, slow, relatively stable and not getting anybody excited. It has now been unexciting for five years. Jack Welch's leaving, his retirement package and his wives providing most the news for GE. That may be an indicator that it is due for some excitement as it has continued to build shareholder equity. From the perspective of most boring, this would be the place to put your money.
- Wal-Mart (WMT) $43.88, P/E 16.00: Wal-Mart has almost been as unexciting as GE except that it has more law suits, employee and customer controversies and has been in the news everywhere it goes as it tries to open up new stores and new markets.
- Microsoft (MSFT) $25.85, P/E 21.49: I had to give some thought about about whether MSFT of TWX belonged in the third slot. Decided MSFT still has done little to get the market invigorated. Talk of buybacks, and Zune and Vista are big yawns right now and XBox still bleeding cash.
- Time Warner (TWX) $16.42, P/E 17.37: AOL constantly being in flux, Carl Icahn buying up shares and pushing the board to consider breaking up the company, the buy-out of Adelphia and the expansion of its cable assets -- all trumped MSFT to take the 4th slot.
- Yahoo (YHOO) $28.77, P/E 28.77: Yahoo fell in this slot by default. It is making some deals and it is a major Internet stronghold, but it lacks the momentum of the other web assets right now.
- Apple (AAPL) $68.75, P/E 31.59: Steve jobs and the iPod made it easy to rank Apple as far less boring than Yahoo, which for a moment almost earned the 6th slot. If we were ranking by CEO, Apple would be the least boring of almost any publicly traded company. The success of the iPod, Apple Stores and expanding market share for the Macs all create plenty of excitement.
- eBay (EBAY) $25.30, P/E 37.33: eBay may have shot itself in the foot in numerous ways, but that alone has put it in the controversial cross-hairs of "Sellers Gone Wild" (video not forthcoming). Add Skype's price tag and controversy, competitive threats, management changes and it is the un-boring company, not to be confused with the best value.
- Google (GOOG) $373.26, P/E 56.20: By far GOOG has captured the imagination of the marketplace and their investment dollars. It is up 400% from its IPO. Its daily release of news, features, alliances, and industry challenges makes it the least boring of any of our eight stocks and it is likely to remain that way for some time to come.
If I wanted to make this more scientific, perhaps I would track trading volume, number of news stories and other factors. But for now I'll follow my gut instinct. There does seem to be a general relationship between creating excitement and the P/E ratio. I think most knowledgeable readers will generally concur with the order based on the Boring Factor.
While I do not believe this could ever be used to predict the future value of a stock or relative position to other stocks, I do think that buying things that are not in the news every day makes for better value. The more something is in the news the more you can expect it to be a trading stock. I look forward to your comments and suggestions.
Disclosure: I own shares of TWX and have no other position in any of these stocks, long or short.
Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an Architecture & Planning firm.
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Reader Comments (Page 1 of 1)
8-29-2006 @ 1:01AM
Andy said...
Don't forget that one of Warren Buffet's smartest moves was to keep his companies away from listing which made them not subject to market fluctuations.Why doesn't anybody see this?
8-29-2006 @ 7:44AM
Sheldon said...
Andy,
Listed companies like Gillette (bought by PG), Coke, American Express, and others that were listed including Berkshire itself stayed listed. Unlisted companies like Sees and Dairy Queen which were not listed stayed unlisted. Generally speaking he kept them like he found them. All the companies are a part of the 'listed' BRK.A so your point is somewhat moot.
8-29-2006 @ 6:41AM
Ebid Shop Owner said...
Nice one Google and Ebay! Thats the best news you could have given Ebid. Many Ebay sellers were holding off for Google to launch a rival auction site, which is why it would seem this move has taken place (remember when Ebay did the same with Yahoo auctions). Now on-line sellers are most likely to flock to Ebid; whose execs are probably laughing all the way to the bank.
8-29-2006 @ 12:33PM
Tom said...
Jeremy Siegel's newest book
"The Future for Investors"
contains a similar hypothesis
8-30-2006 @ 12:35PM
Tracy Riggs said...
EBay and Google made a great move in my opinion. By providing phone service it will now entice bigger and better companies online. Big companies need customer support to service their clients. eBay and Google will give them this option. Want to buy something? Not sure? Click and call! Support team answers your questions, and bingo a sale is made! ...Good business is what I say!
eBay is no longer a small MA and PA operation shipping products in old shoe boxes. Ebay has evolved in the last 10 years.
EBay and Google will accomodate Big businesses from all around the world. I will be able to order anything from the four corners of the world, and talk to a customer representative to boot! WOW! What an idea! I can't wait!
Skype will pay for itself over and over again. The face of EBay is changing. What a great company!