More from TMF, penned by Alan Oscroft;
Vodafone’s share price is rising. Is it time to buy?
https://www.fool.co.uk/investing/2019/0 ... me-to-buy/
There’s an old idea, called the efficient-market hypothesis, which claims that share prices fully reflect all known information, and suggests it’s impossible to beat the stock market as all new information is quickly reflected in adjusted share prices.
It’s obviously tosh, as any look at the real world and the way irrational humans work will quickly show.
Vodafone (LSE: VOD) is a good example. For years, its shares looked very highly priced to me. They were on valuations that significantly exceeded those of the company’s peers, after initially soaring back in the days of takeover speculation and never falling back.
There must be a good reason, something I don’t know but which big investors have latched onto, I thought. But no, there was nothing, and since the end of 2017, the shares have been steadily revalued downwards.
They really had, simply, been overvalued in a way the academics claim doesn’t happen, and it’s taken a 40% slump to get us back to where I can see some rational valuation. And, though I’m not a chart-watcher and I recommend caution over what I’m about to say, there are signs that the price has bottomed and is starting to tick up again.
We’re looking at only a modest 8% rise since the first week in March, slightly ahead of the FTSE 100‘s 5%, and that leaves Vodafone shares trading on a P/E of 18 based on expectations for the year just ended in March — results are due on 14 May.
I topped up my Vodafone holdings today.