<< At a certain price, any stock (even an internet stock) can represent a good value.>> No argument there. I just might differ from others about the number of digits on that price. One digit sounds about right for most of them, at least the ones with potentially viable business models.
I think there are two misunderstandings emerging here
1) This is a thread dedicated to Ben Graham investing. That's not censorship - you don't tune call Rush Limbaugh to talk about gardening. If you are not that type of investor, then this thread would either be a learning opportunity or probably a waste of your and everybody else's time. I do not spend my time on a Ben Graham thread to learn other investment styles.
2) Value investors have some overly rigid ideas about what a value stock is - Warren Buffett has proven to us just what you say, that value investing does not just apply to things trading at book value with no prospects. But there is a limit there. At the core of Graham and Buffett investing is the notion of risk. Any time you are forecasting earnings, except in the case of a Buffett-type inevitable (but even then, forecast conservatively and God forbid don't buy at that price) - you are taking risk. Today everybody calls himself a value investor - only an idiot would buy something at a price they know is more than the business is worth, right? You'd think so, but it is incredible to me how many people do that, admit to doing it, and ridicule me for my conservatism. Which brings me back to the attitude toward risk. And I think Wayne Crimmi agrees that risk should be the foremost thing on our minds today. Ben Graham's discipline is the best way I know to control risk. That doesn't mean only buying net-net stocks. What it means is asking yourself honestly what am I buying, what's the least it could be worth, and am I getting fair value on that basis. That stodgy attitude, Twister, has made me a quite satisfactory return in this frothy market, but unlike the other approaches, it will protect me when things collapse.
Jim |
