"I would just say that Buffett too looked at the price... It determines when to buy"
Once AGAIN you're missing the point about my reference to "PRICE". My reference to "PRICE" has to do with putting "PRICE" into a mathematical ratio, such as EV, and expecting it to give you a MEANINGFUL answer when that mathematical ratio can VARY over short periods of time due to the fact that "PRICE" varies over a short period of time !! CAPICE ??!!
And, Yes, Buffett does consider a stock's price, BUT he does it primarily via his EQUITY BOND analysis as in ---->
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BECAUSE Buffett, first of all, looks for stocks that comply with his DURABLE COMPETITIVE ADVANTAGE (DCA) requirement. And he uses the TARGET PERCENTAGE RATIOS I've been telling you about in order to weed them out.
It's reasonably SUMMARISED here --->
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Once he finds them, he buys them at as low a price as possible and keeps them.
THEN ..... when there's a general FALL OFF IN THE STOCK MARKET, through no fault of his DCA companies, Buffett starts to get "GREEDY" when everyone else is "FEARFUL" because he knows that the share price of DCA, quality, companies will INEVITABLY RISE AGAIN .... CAPICE ??
IMO, the problem with a lot of these "popular ratios", such as P/Bk, P/S, EV, etc, is that the folk who contrived them very likely did not have AN ADEQUATE GRASP OF BASIC MATHEMATICS, seeing as the majority of those ratios rely on a number that varies over SHORT PERIODS of time.
The ratio "P/E" is slightly different to the others because it says, in principle, that if you buy a share for "P" now and the earnings per share per year is "E", then it will, theoretically take "P/E" years to "recover" what you paid for that share.
"GOOD FORTUNE" to you too ......... |
