Whole Foods announcement of plans to purchase Wild Oats markets reminded me of the axiom that good companies seldom make good stocks. Whole Foods is the classic case of the kind of stock my clients come to me and ask about investing in. Everytime they go to the store it is crowded, the prices seem to indicate the company is making healthy profits and the stores seem well run.
Not surprisingly to me Whole Foods has turned out to be a classic near bubble stock. If you were bright (or lucky ) enough to get in before 2004 you would indeed have well outperformed the market. However, if you would have bought the stock anytime since January 2004 and held on you would have ridden a roller coaster to nowhere. The stock went from 50 to a high of 80 and down to its current price of $49, this morning even after a big move up after the acquisition announcement a return of ZERO. S+P 500 for the period +20%.
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