You state that price-BV is "part" of the equation, yet you seek "The" normative issue for differentiating a true value investment.
Do you have empirical evidence that PB is the Holy Grail?
And that "value" is defined at least in part by low price to book value. Yet for investors here who define themselves as value investors, there doesn't seem to be all that much emphasis being placed on book value. At least sometimes, more important considerations seem to be the use of stops, selecting or avoiding certain sectors, or limiting selections by market cap. or float. Buying up versus averaging down. Or sometimes emphasizing the determining of hidden values with a business or the seeking out of information not available to the general public. Not that these are not significant aspects to investing, but they do not seem to be closing in on 'a' or 'the' normative investment model that I'm seeking.
I'm not much good at absolute normative philosophies. My basic view is a medium-size portfolio should pick 30-40 good stocks you believe in for plausible reasons then trade them carefully and intelligently. I see people buying stocks that just get slaughtered in the wrong market climate, based on normative ideological criteria.
Unless your time horizon is Buffett's "close the markets for ten years, I don't care", ideological rigidity does not seem to be the magic key to great returns.
The irony is that the market is not perfect, and any Magic Bullet criterion will be discovered and copied so widely that it loses value. You are looking for certainty and direction on a shifting ice floe, shaped and battered by thousands of different forces simultaneously.
How is that for rambling? |
