I find a rather large difference between value as defined by the mutual fund world, as in large sustainable “safe” companies and the value hedge funds as per Graham. I agree with turning over many stones, metrics will only get one so far, but opportunities and ideas seem to appear randomly. I find the qualitative aspect of analysis almost more important, it seems to me that the attractive long-term investments result when a companies “economic goodwill” is undervalued. I agree with FrankArabia, pure graham worked for about two months last spring.
One of the best threads by far. Thanks guys!
How about this to find a value stock: http://valuevista.blogspot.com/2007/06/warren-buffett-50-returns.html Warren recommends looking at EVERY single stock in the US, all 27,000 of them. Not a screener either, just looking at all of them. Roughly if you spend 10m looking at each stock it will take you 112 work weeks to get through the whole market, a bit over two years. Get going!
Pretty tough to find an edge with screeners these days. I’m not really sure if using old school value investing principles will also provide a meaningful edge, either - most people try to invest in companies for less than their intrinsic value…
pgh.ndt Wrote: ------------------------------------------------------- >> Warren recommends looking at EVERY single stock in > the US, all 27,000 of them. That’s a good lesson for those AFers who whine after reading a couple of CFA study guides without getting the results they feel they deserve. Read more and stop posting on an Internet forum.
When I think of value, I rarely look at ratios. I try to analyze the stock as an instance of the market at that point in time. I take a macro perspective and analyze product offerings (present and future). I believe that reading and creativity are key elements. In this day and age, if you want to outperform algorithmic trading, you need to go beyond ratios and mathematical computations. Analyzing qualitative characteristics and laddering strategies will distinguish a machine trade from a value position. So, how many of you think BSX or C is a bargain?
achilles Wrote: ------------------------------------------------------- > When I think of value, I rarely look at ratios. I > try to analyze the stock as an instance of the > market at that point in time. I take a macro > perspective and analyze product offerings (present > and future). I believe that reading and creativity > are key elements. In this day and age, if you > want to outperform algorithmic trading, you need > to go beyond ratios and mathematical computations. > Analyzing qualitative characteristics and > laddering strategies will distinguish a machine > trade from a value position. > > So, how many of you think BSX or C is a bargain? I’ll be honest. I have no idea what you’re talking about.
I looked at Citigroup. The short answer is “no”. It is not a bargain in the sense that there is a high probability of the thing not performing. Even looking at the last 10 years of Citi history, it was never a Tier 1 bank imo. I don’t get into anything with the possibility fo losing money, so if it doesn’t fit that criteria, its a easy no for me and for the blonde I will approach tonight. Some will look at the low P/B ratio and say, “wow, what a babe”. Truth is, the accounting is opaque even for a financial institution, so that ratio is not relevant in C’s case. If you look at the company, you’ll notice a lot of heads rolled out adn for a massive giant, that’s not a good thing. The P/B is not below 1 imo. There is a lot of stuff they did not write off. Plus, their earnings stream going forward is questionable. their best asset, their cash management/transfer business is what I would invest in, but that’s it.
What ever computations a value investor typically performs are performed more efficiently and (possibly) accurately by automated trades. However, UH frequency trading operates in a limited space with limited tools at it disposal. eg. You cannot identify “automatatically” a strategy like 1) Big Auto in distress and cash for clunkers initiated -> so long Big Auto (or buy debt) 2) New car sales increase -> short auto part suppliers 3) New car sales increase -> long auto accessories Very simple example. Not perfect in anyway, but to maximize expected returns, reduce beta at the same time and to account for many other things such as consumer sentiment for the current and future product offering requires due diligence that machines cannot perform. So, is this value investing? I don’t know. But it works for me most of the time. Positive returns have outweighed losses yet. Need to see how it pans out going forward. I believe in yin-yang. There needs to be an opposite force to balance the position 
Need to find a mate for BSX. EMHdenied Wrote: > I’ll be honest. I have no idea what you’re > talking about.
I’m interested to know the track record of the value investors on this board (annual returns), starting with Mr. Arabia. Even if it’s not a long history, I’m curious to see how well so far your strategies have fared vs the market and by how much do you feel you have to beat the market to justify the time spent researching stocks (because there is an opportunity cost at anything you do in life).
I can tell you that the market is winning lately
former trader, if you were on my value buddy list, you would know exactly how I was doing. However, i remember you humuliating me calling me a douche and arrogant prick with a below average package. I was born with what I have. who wouldn’t want to be more polished? But I will put my money where my mouth is. And you can judge for yourself with a stock I recently bought so there is no possibility of me lying or tainting my results with exagerrated claims like I did 100% in 2 days consistently. I recently purchased Chubb Corp at around $50. this was around 2 weeks ago. My holding period is definitely long term so I really have no intention of selling unless the price hits my target in a very short time period. “if the haters hate then late them hate and watch the money pile up” - 50 Cent
Frank, I don’t understand why you find it necessary to play a “character” all the time. SFLCFA, the market is up 70% in the last 12 months, so I can understand you are losing using that timeframe. What I am more interested to know is (from all value investors who have posted in this thread): 1) Have you beaten the market since you started (net of fees of course) 2) What % above the market are you aiming to achieve to justify spending your spare time researching companies.
former trader, i don’t understand why you have to belittle me every chance you get. I did nothing wrong to you. why are you even asking these stupid questions? the two questions you just mentioned makes absolutely no difference. to answer for the forum 1) yes. easily. i am the greatest. 2) 10-20%
I suppose humility is an under-rated character trait here. I’ll be open here… I was first exposed to value investing almost 6 years ago as a Junior in college and spent the next few years reading anything I could get my hands on. Luckily, I had 100% of my net-worth in cash pre-credit crises in anticipation of funding an MBA. Beginning with October 2008, I put roughly 20% of my capital and it’s turned out quite well. I don’t know you well at all, so to echo FrankArabia, I have nothing to prove to anyone other than myself. To answer your question regarding the cost of information in terms of time. This is something that I enjoy doing so I really don’t think along those lines. Investing is not a game, especially for risk-averse value investors. The entire premise is based on limiting downside risk – and when you think about limiting that risk, the upside naturally runs it’s course. I think a lot of people think about how much they can make on a trade – I prefer the opposite course.
@ former trader… I will answer around noon tomorrow when I have my assistant run up numbers for me. If you really want to know, here is one of my picks…MCK…I am close to making a xx.xx% return, of-course long term holding period. I totally agree with Frank and ValueAddict.
achilles Wrote: ------------------------------------------------------- > @ former trader… I will answer around noon > tomorrow when I have my assistant run up numbers > for me. If you really want to know, here is one of > my picks…MCK…I am close to making a xx.xx% > return, of-course long term holding period. > > I totally agree with Frank and ValueAddict. With all due respect, I’m curious about this as well. I’m a value guy at heart myself, but I’m still trying to figure out for myself if value investing>index investing as far as performance net of fees.
In 2009: In my retirement portfolio I was up close to 30% for a 60/40 portfolio. Not a straight value portfolio as I’ve mentioned in previous posts I use mutual funds for large cap, bonds and foreign. In my taxable portfolio which is more “pure” I was up 50% in 2009. Both portfolios are about equal size.