Buy Good Value and/or What Other People will Like? - Page 2

Evan · #11 12-14-2005, 04:12 AM

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By the way, I would gues that buying and holding is how people at Wal Mart make millions:

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I will echo Aces sentiment... not in the last 5 years!

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Um, okay.

The S&P 500 has lost money over the last 5 years, does that mean the S&P 500 is a money-losing investment? By the way, Wal Wart has beat the S&P over the last 5 years:

It's amazing how people in the investing section of a poker website can have such a limited understanding of how long the long run is. You can't just go around extrapolating growth rates into perpetuity and convince informed people that they mean ANYTHING at all.

Furthermore, how I can show you a chart of Wal Mart returning more than 75,000% over the last 35 years, and you can counter with a shortsighted statistic about their performance over the last five, is something I will never understand (please do quote this out of context to insinuate that I think history is necessarily correlated to the future).

Evan · #12 12-14-2005, 04:17 AM

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Capital gains taxes?

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Capital Gains are good.

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Sniper · #13 12-14-2005, 04:55 AM

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It's amazing how people in the investing section of a poker website can have such a limited understanding of how long the long run is. You can't just go around extrapolating growth rates into perpetuity and convince informed people that they mean ANYTHING at all.

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The same could be said about some poker players views on playing poker.

There are many different trading styles represented in this forum.... stick around, you might learn something!! [img]/images/graemlins/smile.gif[/img]

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Furthermore, how I can show you a chart of Wal Mart returning more than 75,000% over the last 35 years, and you can counter with a shortsighted statistic about their performance over the last five, is something I will never understand (please do quote this out of context to insinuate that I think history is necessarily correlated to the future).

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You are making an assumption... that a trader couldn't have made more by trading in and out of WMT over the same period... you are wrong!

MaxPower · #14 12-14-2005, 01:18 PM

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I'd rather buy what people like. They might never like your "value" stock. It won't go up if people don't buy it. You can never be sure of what "good value" is anyway. Companies lie all the time.

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Yeah, I have to agree with this. If a company is fairly valued or close to reasonably valued and they are likely to have good news in the future they are more likely to go up than companies that are "undervalued".

Plus we can be wrong, just as the market can be wrong.

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And your evidence for this is?

MaxPower · #15 12-14-2005, 01:21 PM

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You are making an assumption... that a trader couldn't have made more by trading in and out of WMT over the same period... you are wrong!

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In theory someone could have, but I bet nobody did.

MaxPower · #16 12-14-2005, 01:25 PM

If you are going to go the non-value route then you need to buy what other people in the market think other people in the market will like.

I wouldn't take that approach myself.

Sniper · #17 12-14-2005, 02:02 PM

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If you are going to go the non-value route then you need to buy what other people in the market think other people in the market will like.

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There are far more than 2 routes to success in the market! [img]/images/graemlins/wink.gif[/img]

Dan Mezick · #18 12-14-2005, 04:51 PM

The biggest issue in value investing is the "realization of value" problem. It may take many years to realize the tremendous value you have discovered that no one else notices yet.

DEWY is an electrical contractor supply firm in NJ. They own land well in excess of their market value.

It came to my attention in 1996 when it was selling for $1 a share. Land values indicated it shoudl be over $2 a share at that time.

It now sells for $3.60 which is still a 50% discount to the value of the land holdings at current prices.

DEWY
http://finance.yahoo.com/q?s=DEWY.OB

Evan · #19 12-14-2005, 05:22 PM

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You are making an assumption... that a trader couldn't have made more by trading in and out of WMT over the same period... you are wrong!

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In theory someone could have, but I bet nobody did.

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Exactly, and I bet a lot of people made less.

DesertCat · #20 12-14-2005, 05:27 PM

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The biggest issue in value investing is the "realization of value" problem. It may take many years to realize the tremendous value you have discovered that no one else notices yet.

DEWY is an electrical contractor supply firm in NJ. They own land well in excess of their market value.

It came to my attention in 1996 when it was selling for $1 a share. Land values indicated it shoudl be over $2 a share at that time.

It now sells for $3.60 which is still a 50% discount to the value of the land holdings at current prices.

DEWY
http://finance.yahoo.com/q?s=DEWY.OB

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This is exactly true. It's why a good value investor shouldn't buy into a business unless a) it has a clearly defined catalyst that will unlock the value, or b) the business's intrinsic value is growing at a strong rate over time, so you will benefit from the growth while you wait for a narrowing of the value gap.

Exceptions can be buying large groups of undervalued businesses as a portfolio, which is what Ben Graham's mechanical formulas would do, and how Walter Schloss has succeeded for the last 50+ years. Some will close their value gaps, some won't, but overall the results can be good if you buy cheaply enough.

BTW, by your account Dewey's return would be about 15% a year. That kicks the S&P 500's a**!