No. of Recommendations: 19
... First thought is, you could be buying kodak. You have spotted the biggest weakness, which itself is enough to ignore it.
It's a trend of price, not value.
Almost ANY proxy for share value will work better than assuming that the price can be extrapolated meaningfully over a period of years.
Certainly an inflation adjustment is needed, too, but that's a lesser quibble.
Another big issue is that the trend lines usually overlaid on the charts could not have been known at the time.
They include recent data to set the old level of the trend line.
The temptation is to see that prices below the trend line were, in the past, good entry points.
This is a fallacy: the trendline is where it is because of the more recent higher prices.
For a more sensible approach, which uses trend lines based on proxies with more information about actual value, the charts from Ned Davis are probably best.
Each firm is analyzed to see what metric works best for that firm and industry.
Or even Value Line reports (the company name is taken from the value proxy on their charts).
Or simpler ones like earnings and dividends and book, examples here
https://web.archive.org/web/20220331080454/https:/...Jim
