Well, no need to go into that again (I forgot that we had a debate over that :-))
I would just say that Buffett too looked at the price... It determines when to buy... Wouldn't you rather buy most stocks say, autumn -08, or march-april -20, than a year before? Hardly a controversial point, I would think!
The same goes for indivudual stocks – I'd rather buy old-school car makers now (bought VW the other day) than TSLA, even though I would love to own Tesla as a business. Me, I'll wait for after bubble. Wouldn't you?
I don't see why one should take advantage of the oftentimes arbitrary pricing of Mr Market. Ratios can help one find such. They're a quick scan. But of course you can't rely on them too much–they can be misleading. You have to dig deeper. That's why we have historical data – and... INCOME STATEMENTS!
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Income statements etc:
Fair point: I do spend too little time reading annual reports and looking at income statements and balance sheets in depth. It's becoming all too clear, and all the time clearer, to me that there really is now way around that – that's how you achieve consistent exceptional returns over a long period of time (and probably the only way) : you get to know the company intimately. I'm trying to solve that problem by delving deeper into the above. Just takes so much time – I can't seem to squeeze the hours in...
Admittedly, I'm rather new to the game still, and it is indeed a universe/microcosm. It's easy for me, as in any field, to want to absorb and learn the whole thing at once. As I learn more and more each day, there is just so much to learn in investing, and I feel like I make one new game-changing insight every week or so, even after a couple of years of studying it relatively intensely. Kind of a Sisyfos situation, but an immensely rewarding one at that. Indeed, I feel like there are increasing returns to that approach, and as with almost anything, an exponential learning curve at a certain period of ones studies, when you get past the initial doorstep. I kind of feel like I am there now, which is exciting. Hopefully it never goes away...
Also, bruwin, since I've started admitting to my ignorance, I'll continue, and ask your help while I'm at it: what do you consider a good FCF? Through which angles do you look at it? (I'm guessing not as P/FCF... ;-))
(Open question to all)
Good fortune |
