I was generally positive on the company, but (as you’ll see below) I concluded with something far short of a clear endorsement of the stock. You would have done best to disregard my closing remarks; the stock has performed extraordinarily well since I wrote that piece. Here’s how I ended things last year:
So, if you are comfortable with Nintendo’s position in handheld gaming and you truly believe in both the company and the Wii, shares of Nintendo would be a reasonable long-term investment at this price. However, even considering the large amount of cash and securities on the balance sheet relative to Nintendo’s market cap, Nintendo isn’t a “value” style purchase based on past performance alone. Buying shares at the current price is a bet on a brighter future.
While I like Nintendo’s future prospects, it’s usually safer to bet against a revolution. So, I’d have to say Nintendo is a very interesting business that’s priced a bit too high to be a very interesting investment.
With the larger than expected Fed rate cut today, I thought it might be appropriate to add some perspective from Warren Buffett. He made these comments to CNBC’s Becky Quick, before the announcement from the Fed:
Warren Buffett: (Laughs strongly.) I represent a different view, maybe, than your other viewers. I don’t think it makes any difference whatsoever to an investor in stocks what they do today. I don’t care, I wouldn’t care whether they raise the rate in terms of what I would do in stocks. If I knew exactly what they were going to do, I would not change a buy or a sell order that I have in…The important thing in stocks is to buy a stock in a good business at a reasonable price. Anybody that is buying or selling stocks based on what the Fed is doing, or what they think they’re going to do at their next meeting, I think is destined to not having a great financial future. It really doesn’t have anything to do with the value of good companies 3, 5 years from now.
WB:I’ve worried about inflation every day since I learned about the phenomenon, 60 years ago. (Laughs.) It’s always a danger, always a danger. It’s never gone. It’s always in remission, and question is how well do you do over time controlling it. But, the purchasing power of the dollar will go down over time.