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David Stafford
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Student of markets, enjoys following their course.
My book:
Around the World in Several Pieces
  • Thoughts On The Stock Market Being "Overpriced", And RYN. 0 comments
    Nov 21, 2013 5:32 AM

    It is a common refrain to hear that generally speaking, the stock market is overpriced. Perhaps one could argue, that this has always been the case for "capital preservation", aka bluechip, aka famouse stocks, that have small yields, and counting dividend and price appreciation, maybe beat inflation by about 1 to 2 % yield wise.

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    Though the stock market is indexed, it is arguable that even though this may be the case, and perhaps has always been the case, that there are still stocks out there that are a great deal.

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    An example of this is a stock that I like as of late, namely RYN.

    Rayonier, is a lumber company, and recently I've taken an interest in this sector per se, along with the whole green emphasis that was appearing to me and still continues to be per se.

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    When one has a somewhat high dividend stock, it is relatively easy to see if it is overpriced per se, and though this sounds deceptively simple, I think it may belie a basic truth. Namely, that if a unit of stock per se, maintains its value relatively speaking, relative to stock buy-backs and splits, and has essentially a strong long-term correlation to an underlying per share basis per se, over a long period of time, it may be hard to say that it is overpriced.

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    As an example, using RYN here, if one looks at RYN's chart over the years, one can clearly see, that every major jump in price, has usually been the result, of some sort of equity related action by the company per se. Namely, buy backs, various splits, and hence, in turn dividend increases.

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    The fundamental truth per se, that this may elaborate upon, is that easy money per se, flowing into the stock market, and inflating prices, may to a certain extent, be shuffled along, out of one's major concerns concerning the price of the stock in question, in this case RYN. For, if the stock is primarily responding to company controlled variables, as opposed to random-market sentiment/participant based stimuli per se, then one can argue, that even though easy money per se, could fuel various swing in short term volatility, that in the end, the stock is really in the control of, and priced on the basis of, the companies actions.

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    In the case of RYN, I think its very providential per se, that it recently missed an earnings figure. This is perhaps due to analysts overshooting their presumptions, concerning the I guess you could call it, integration time(in essence something similar to "duration") concerning new purchases per se, and to be honest, that does seem like the sort of situation that may require a little bit of patience, which is something that news traders, obviously are not including in their tool-belt of valuation approaches per se.

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    Hence, as someone who might be interested in building this stock into a portfolio to include its relatively obscure beta, and decent yield, of between 4-5%, this is not a problem.

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    The most recent miss per se, in earnings of .02 by RYN, is also at least according to what the company "says", per se, all accounted for and wasn't surprising, hence, putting the stock price, back into a position of being within the company's control, instead of the market's control, per se, and given that this situation correlates to the value of the company, and the yield of it's equity, slowly rising over time, I feel as though its safe to say that RYN, can help in strengthening various elements of a portfolio that its included in, namely concerning yield, and obscure beta.

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    Hence, these easy money arguments, and easy money in general, may at times affect prices, though maybe it has more of an effect on "patience" per se, concerning longer term correlations of equity to company actions etc, namely the lack of patience of market participants. Either way though, when it comes to RYN, and whatever the market's overall guiding principles are at the moment, its perhaps always nice to partake in a market place, where one's fellow participants, can essentially put an item "on sale" for you.

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    Hence, in investing in a company like RYN, or any other lumber company, its always nice to at least attempt to see the forest-through-the-trees(sorry, had to say it), and to sleep soundly, knowing that somewhere, some small patch of forest has your name on it, and that strangely enough, its actually a part of one's stock portfolio, its all pretty cool perhaps when one thinks about it, and if that's not diversification, then one might be hard pressed to every find, this convenient friend of portfolios everywhere.

    Themes: RYN
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