It might seem illogical that investors would value a company at less than the cash it has.

By the time Palm was spun off to shareholders this year, investors valued it as worth more than the rest of 3Com.

When the shares were reoffered days later, investors valued them higher than they had when the boss was alive.

But because the company holds $900 million in cash, investors are valuing its actual business at only about $500 million.

Even though the company's stock has fallen from its peak, investors still value it at about $25 billion.

Despite the obstacles, investors are valuing Dreamlife at $650 million.

Using an earnings multiple typically applied to retailers, investors could value the Sears retail operation significantly higher than they do today.

It's now at about $150, which means that investors value the company at around $20 billion despite only $47 million in sales over the last 12 months.

That's why investors should be valuing companies for the long term, not trying to game the system.

Share prices have nearly tripled since the beginning of 1995, he said, so investors already value the shares fully.