Those wise analysts at Morgan Stanley have suggested investors ‘take profits’ from their Salesforce.com shares.
This is a nice way to say ‘sell out’. Here is the thing, unless you’d bought your Salesforce shares before 2006 (three years ago) you wouldn’t have any profits to take. Apart from a brief period in late 2006, any other buyers will be selling at a loss.
Where were these analysts back in September 2008 when the financials screamed ‘overvalued’:
or at the height of the bubble around three months before this? The financial reports were the same and yet the so-called experts felt $70/share for Salesforce was great value.
The analysts will blame the economic downturn but as can be seen in in the blog post above and in this one, the financials of Salesforce have been following a steady path for the last five years.
Moral of the story? Understand analyst motivation. It is not always to provide impartial advice to the market for the betterment of the average Joe investor.