H.J. Huneycutt's  Instablog

It's rare that I venture into the world of megacap companies.  I'd rather find underpriced small cap companies, particularly ones in volatile industries.  Yet, it occured to me that in the past year, I have never once looked at Apple's (AAPL) financials.  There were reasons for that:

(a) It's a megacap company and large companies typically have less room to grow

(b) It's too heavily followed to create much in the way of huge pricing inefficiencies on the downside; plus, it's been a trendy stock for years, which drives up its price further

For those who follow my writings here at Seeking Alpha and my investment analysis at Motley Fool, you might know that I tend to veer towards stocks that offer the highest reward potential, which means I end up buying a lot of “medium risk” and “high risk” securities.  However, there’s nothing I love more when the market offers stocks in what might-be-traditionally considered “lower risk” sectors at prices with “high reward” potential. 

Back in March, I postulated the idea that several REITs on the market were potentially screaming buys.  Here in July, most of the REITs have seen significant appreciations in price as the market seems to slowly being realizing it overreacted just a tad.  Despite the run-up, I still believe many REITs are strong buys and offer opportunities for “multi-bag" returns.

Since early March, I have promulgated the idea that REITs have been overly punished by the market.  While there are certainly some garbage REITs out there, there are also high-quality REITs selling at bargain-basement prices.  Prices have risen since early March, but I still believe REITs in the aggregate tend to be undervalued.  All the same, I want to focus my investing efforts on particular companies with attributes I like. 

In my recent article on Pennsylvania REIT , a dissenting commenter wrote:

For years, Americans allowed themselves to be convinced by mistruths parroted by politicians and the National Association of Realtors that an economy based on home building and sprawl could thrive permanently.  Just like the deluded investors in the Roaring Twenties who convinced themselves that stocks could go up forever, people became convinced that home values could see dramatic appreciations in value for the rest of time, with no negative side effects.  However, the myth of American economic infallibility has been destroyed over the past two years.  Now, Americans suddenly find themselves reexamining the situation.  In truth, this might only be the beginning of America’s economic decline as this nation is not built to thrive in a resource constrained world.