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No. of Recommendations: 4
The future is uncertain all the time for everybody everywhere. The best anyone can do is make an educated guess.

Different people develop different styles of investing, just as they have different methods of buying a car, choosing a spouse, or shopping for toasters.

Over time, different styles go in and out of favor as well. Sometimes, the market is obsessed with dividend yields. Other times, it couldn't give a flying fig about them. Same with high growth, market share, size of capitalization, return on equity, debt to asset ratios.

You're correct when you say that all stocks are faddish all the time. All companies are speculative. But some stocks seem like a better bet than others at any given time.

The people who have gotten very rich in the stock market did it in one of two basic ways: either they made a handful of very large bets that paid off big, or they spent a lifetime paying more attention to what they were buying and how much they were paying for it than they spent worrying about day-to-day price fluctuations.

As for when JAKK will get respect, who knows? It's more than doubled in the past year, so that's pretty respectible. But there are plenty of worse companies selling for much higher valuations.

In point of fact, no stock is "respected" continuously. McDonalds was selling for 40 times earnings in the 1960's and 2 times earnings at the bottom of the 1974 bear market. Warren Buffet has made a fortune off Coke and Disney and Gillette, but that's because the market at certain points in time had no respect for those companies whatsoever.

In my experience, if you put together a list of companies that are getting no love from Mr. Market, and look at those same stocks in a year or 3 years or 5, you will find either that the stock has become "respectable" and swelled in value, or the fundamentals eventually deteriorated to match the sentiment.

Besides, there are plenty of excellent companies which have been around for 20, 50, 100 years or more that are selling for less than JAKK on a price to sales or price to earnings basis. Right now JAKK is 12 times earnings, but consider these guys:

Goodrich Tire (GR) 7x earnings
Pulte Homes (PHM) 8x earnings
Sara Lee (SLE) 8x
Boeing 10x
Rockwell International 11x

Now I don't know the particulars with everyone here. But it seems to me that there's probably some good deals to be had in that bunch. However, it's been my experience that there's probably at least one turkey in there as well.

Like I said, the future is uncertain and different people are looking for different things at different times.

Incidentally, it's not a permanent state of affairs for "teen retailers" to sell cheaper than the average stock. As with toys, the street is wary of them but sometimes goes nuts. AEOS was $9 in June 2000 and $38 in Jan 2001. I very nearly bought a pile of ANF for $10 a couple years back and by the time I turned around, it had jumped to 27 and then to 40.

I just felt I didn't know enough about ANF to buy into it. On the other hand, I felt very comfortable buying HOTT when it was $14 and it more than doubled.

Peter Lynch once made up a list of 100 stocks that had gone up more than 1000% that he never owned. But obviously somebody owned them. The companies had employees, suppliers, competitors, and customers that all knew and understood what those companies were up to. And many of them made good money by acting on that knowledge.

His point was what it always is- stick to what you know, do your homework, use some common sense and over time you'll do ok.
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