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Wednesday, June 9, 2010

When bad things happen to good stocks

Why do bad things happen to good people? I can't really answer that one and frankly it isn't a very interesting question. Now, why do good stocks become slaughtered for no reason? That's a question that's worth asking.

Case in point Johnson and Johnson (JNJ) and Becton Dickinson (BDX). These are both good healthcare stocks with low multiples (compared to their historic norms) and good projected growth rates. They have also been utterly annihilated (relatively speaking) in the recent market sell-off. In fact, they are even being sold off as badly or worse than the broad market. Why? There really isn't a good rationale. The market is just very lousy at the moment:

If you have been looking for some good core positions that you would like to be on sale, this isn't a bad place to look. Really bad markets such as this do have their good points. 2000-2002 and 2007-2009 had more than their fair share of these opportunities.

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