Five year anniversary here. What have we learned?
Here's from my perspective - and I don't claim to see it like anybody else might. I'm also biased in some of my comments.
In no particular order - I am just rambling on Saturday am.
Posters went through a period where psr was considered as a key determinant for value stock selection. Reference book was Ken Fisher's "Super Stocks". Eventually this text was discarded as ineffective in picking stocks to buy - although I believe psr was not so disparaged here for selecting sell points for stocks already held. (The boom in tech stocks and dotcoms during the past few years may have played a role in shunting aside the importance (if any) of psr.)
The importance and use of discounted cash flow or discounted earnings analysis to the valuation process was commented upon by new and old value investors. This method for selecting stocks was eventually discarded here. Somebody started a separate thread for dcf, and it eventually died. There were two major issues (I am giving my opinion here): the arbitrary nature for the values that are the variables in the formula, and the difficulty posters had in selecting actual stocks. (There were few or none mentioned. I can only recall the brouhaha when a professor/financial advisor selected Microsoft here as being an extremely undervalued Value Stock by his dcf analysis.) As one would expect, with few dcf stocks to review to see how well the methodology worked over time, and no dcf list of stocks from which to select, the dcf approach dropped from this site.
There have also been discussions here about Buffett and value investing. Also about how short selling fits or doesn't fit the value investing approach.
The cyclical nature of stocks became more apparent during the five years. Or perhaps I am just posting or seeing more stocks that have had a rise (to fair value) and then come back down to be undervalued choices again.
aside: Time to look at NTK again? It was post #1.
finance.yahoo.com
I assume most of us now see the cyclical nature of tech stocks -- that was something that value investors here saw in '96 - but it may have taken to 2000 before the tech boom turned.
There have been several discussions about diversification vs. concentration. I will guess that more people here are now at least open to the importance of diversity of investments (risk control) vs. their opinion in '96- '00 that concentration was preferable (concentrate to maximize gains).
(Being a big believer in highly diversified portfolios, I cite now the Glassman 11/18 Washington Post article where a study indicates 50 stocks perhaps to deal with the market's increased volatility - thats up from 15-25 or 30 one might usually see from such studies -- and even 50 might not be enough for reasonable-sized value investor portfolios, I am guessing.)
I note again the diversity of opinion on what constitutes a value stock or what people here are willing to buy as "value". I'm surprised at how few of us will buy the same stock. This year there have been 10 stocks named here for which 3 posters here each said that they bought the stock. (That number 10 is higher than in previous years, I believe.)
I'm surprised how few of the early posters remain. Maybe they've just changed their names -g-. Still, some people here have had notable success in their investments (from what I can garner from posts over the years.) We have at least one person starting his money management firm, one analyst becoming a money manager, at least a couple of people exiting the daily grind to manage their own funds full-time, one person who managed his funds full-time 5 years ago who got big (well, able to buy blocks of 20,000 shares of a $60 stock.)
This thread never became popular in terms of number of posts. Only 13,000 posts vs. Gorilla & King's 49,000 in less than 3 years or Befriend the Trend's 49,000 in 3 1/2 years. Once in a while though (on dull trading days ?), the Value Thread hits the SI hot list. So there are likely a bunch of lurkers around.
Regarding quality, I don't know if the stocks mentioned here are better value candidates now than were the stocks mentioned in prior years. It seems to me the quality of posts here has declined though. In past, there were more in-depth discussions of particular stocks; now there seem to be posts that only say, "I bought x, and y, and z today."
Regarding quantity, I don't know if more stocks were mentioned in previous years or more stocks are being mentioned now.
Five years ago it was harder for me to mention what I considered my favorite or best or most promising ideas (not that these ideas ever worked out the best), because I figured (wrongly) that people would glom on to them and push prices up before I was sure I had purchased enough. I now realize that except for micro microcaps, that's not at all a problem - either no one listens to me or else so few people read the thread and among the few readers, there's not much agreement anyway. This relates to the comment made by David Dreman when interviewed for his Contrarian Investing book - he replied to the interviewer's question that he felt so few people practiced value investing that publishing his methods in his books would not popularize such methods and would not dry up the supply of his potential investing candidates. So I'm saying, it's likely, imo, that people who post their picks here won't be hurt by doing so, so please keep those ideas coming.
We probably don't recognize posters very well, especially some of the infrequent ones here who've done good work. It's one thing to see the people who post a lot, who have lots of stock picks, and/or who post how some of those stock picks turned out. There seem to be a number of people though who only occasionally "slip in" a few stock selections, and in retrospect (like a year or 18 months later), if we're alert or astute, we might see that those few did remarkably well. I believe we should try to acknowledge those people better - at least encourage them (and others) to continue posting their picks. Everyone's work and ideas are necessary and appreciated even if recognition is not explicitly stated. We've had the comment: "Hey, I gave some good stocks and no one commented on them at all." Keep posting anyway, I say!
The thread has remained civil even during some heated arguments. We may have lost a few good people. OTOH, sometimes conflict brought out people's best work and ideas.
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Anybody else care to comment on the past few years here? |
