Hard to swallow? Yes. These are repeated gut checks for any value investor. I've been using Enterprise Value/EBITDA with a maximum of 6 as one of my criteria. Wow. When you hold one of these at 6 and then see the ratio fall to 3, it is indeed hard to swallow. Especially when, like me, you usually don't take new lows lightly but this time prided yourself on the fundamental value.
But you don't have to buy a high-flyer. That's just a lack of discipline. May I suggest that any regular here, if ever tempted, try to justify buying a high-flyer here first before buying? Without discipline, long-term, you might as well just buy a mutual fund or hire a money manager. Because 99% of people are undisciplined investors, and 100% of them will be part of the 99.9% of investors that fail to achieve superior long-term gains. There's just no point.
Myself, I'm starting to see a lot of Buffett-like stocks laying around. This is a change from when I had to buy a lot of cigar butts, cyclicals, and decent-companies-at-a-discount the last few years. This is a switch from my version of Graham-like investing to my version of Buffett-like investing. I sold Crane and bought Liz Claiborne. That's my first switcharoo. Looking to make more in the coming weeks and months.
BTW, sold Mattel today; I was suspicious and started looking for an exit when the numbers came out. Now S&P's debt downgrade nicely summarized my suspicions. I'm outta there. This is a good example of a free S&P debt report detailing the magnitude of the troubles better than any retail stock report. biz.yahoo.com
Good investing,
Mike |
