Saturday, July 26, 2008

Catching a falling knife?

Is every falling stock is an investment opportunity like recent US financial stocks? Not really. Read on.

(WSJ)When bankers themselves have no clue what their own assets are worth, there's no way most outsiders can determine which stocks are undervalued and which cannot be valued.

Graham warned that speculation is most dangerous when you delude yourself into thinking you are investing, take it seriously and risk more money than you can afford to lose. Many people who stampeded into financials over the past few days may end up wishing they had heeded Graham's advice. For many banks, the nightmare has only begun.

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