Mike: re "Value" investing semantics...
Funny, having tried "value" investing in the classic Ben Graham sense, with predictable results, I found the distinction in TFM between "value" investing and GG investing being a different and superior genre of finding value in the mkt, as being crystal clear. Under the Graham "value" investing ideology, you ferret out companies selling at or near cash per share, "net nets", beaten down PE due to poor management ("but the core business is OK" is often heard) and such. Unfortunately there is also usually a good reason for those companies to be valued at such low mkt cap. "Value" wreckage like Fruit of the Loom, Singer, Chiquita, Mattel (MAT my LAST "value" buy before GG) is easy to find. Tell a diehard "value" investor that GG investing is value investing in a superior sense, and they will take umbrage. Graham's "value" investing is a great bear mkt strategy. Nuff said.
Bottom line: "value" investors try to find a bottom for a struggling stock. Finding a bottom for a stock IMHO is impossible. MAT was deemed a "value" at 22...no wait 17...oops make that 14....12....10....GG investors realize it is also impossible to find a top to a winning stock. But unlike the "value" investors, they have the wind at their back...as the mkt realizes the gorilla qualities of a stock, the stock keeps on going and going and going, much to the consternation of value investors who are down 50% from the bottom they thought their "value" stock would not go below.
With that in mind, I believe the GG excerpt you quoted draws a perfectly clear distinction between "value" investing in the Graham tradition and seeing genuine value in Gorilla (or king) stocks with an unfair advantage in its fast-growing tech mkt space. Cheers, Mike |
