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Choosing Deep Value Investments
Many investors are pessimistic about the prospects of their investments in the coming year. In this regard we are looking at the process of choosing deep value investments. We see the pessimism in that stocks are rising on tepid earnings reports as The New York Times reports.
Late last month, chip giant Advanced Micro Devices reported disappointing financial results for the fourth quarter and warned that its first quarter performance would be weaker than expected. The stock surged 20 percent. A couple of days later, General Electric reported one of its skimpiest quarterly profits of the century, badly missing analysts’ forecasts. The company’s stock posted its biggest jump in nearly a decade.
In recent weeks, numerous companies including Wynn Resorts, Ford and JPMorgan Chase have missed Wall Street forecasts, only to see their stock prices rise.
It’s a classic relief rally.
In other words, investors expected further reports of bad earnings, were bracing for such reports, and were relieved that things were not as bad as anticipated! That is a heck of a way to start out the year! If you are good at choosing deep value investments, you will pick stocks that have been or will be beaten down and which will recover and provide you with great earnings and dividends for years to come. If you are not so good at choosing deep value investments, you will lose money time and time again.