If the company's total market valuation is unrealistic in relation to its total profits, forget it. He thinks about two-thirds of the speculative excess has been wrung out of the market and counsels a strategy of picking stocks one at a time, as they seem to be hovering near a price bottom. Some of the areas in which he's beginning to see value are semiconductors, financial services, and telecom. These are among the thoughts Vick shared in a chat on Dec. 14 presented by Business Week Online on America Online, in response to questions from the audience and from BW Online's Jack Dierdorff and Amey Stone.
Edited excerpts follow.
That implies about another 1,000-point decline in the Dow, and several hundred points in the Nasdaq, before we're back to fair value. Many sectors are now turning undervalued for the first time in three to four years. But, in general, it wouldn't surprise me if this market trended lower over the next year. Other sectors that look very attractive to me include the food group, housewares, restaurants, heavy metals, and heavy equipment and machinery. As I just showed in the Veritas example, Buffett would determine first whether the entire company is worth owning.