Paul,
>>Wayne Crimi. Well my attitude is basically this: "What we are looking
for is value plays". If I can't identify value plays myself or pick up
on value plays that others have mentioned, or if nobody is mentioning
anything they think is a value play, then it's a waste of time thread.
Nice to have discussions about Buffett vs. Graham, or relative pe's vs
relative ROE's or importance of management, or asset bubbles or
whatever-- but such discussions are, IMO and from what I can tell, not
the purpose of this thread.<<
It seems to me that in order to correctly value companies, these sorts of issues must be understood. Without an understanding of them, we would all be recommending companies that are not the good values they are perceived to be. I thought this thread had a duel purpose.
>>To me, at least some of the concerns you bring forth are Red Herrings.
For example, there's been stuff written in the literature for at least
25 years that I recall, about the sorry state of pension funding, and
how, if the true costs of pension liabilities were known, some of our
largest and smallest companies are in big trouble. Well, that's 25 years of this. And these companies are, from what I can tell, mostly still muddling through. Anybody who spent much time trying to determine true pension cost exposure in each company he/she looked at, or made investing decisions based on pension issues (like avoiding such companies), wasted time and missed, IMO, some wonderful investment opportunities.<<
The key is that the value of any company is related to its pension status in part. Is it underfunded or overfunded? That doesn't mean that those companies that are underfunded are going out of business. They are worth less than they appear to be. It is not a waste of time to know if a company has or could have a bunch of liabilities that are now not clear. It's one of many things to think about. I think it is an issue now because all such pensions have been generating very superior returns for the last 4 years. That means allocations to those pensions for SOME companies have been running below ususal. That translates into higher NORMALIZED reported profits. At this stage of the game, I would prefer to own a company that doesn't have such a pension or is overfunded like IBM. There will be fewer potential negative suprises if we have a bear market. To me that is a VALUE issue.
>>Obviously, I don't understand what you are trying to do to help. For
example, you bring in Greenspan, asset bubble inflation, central
bankers, and we are going to pay for this. Well, what would you have me or anyone else do? Sell all our stocks which we own and think are
undervalued or all our growth stocks? Not buy any stock that anyone
posts on on this thread because of this and other dangers you can point to? You may be entirely right if you are saying that market is going to punish us all. But that's not been the right belief in the past few years. It has been a hurtful rather than helpful position for anyone who's followed it.<<
In most cases I am just trying to explain my view of what is going on and what the expectations for stocks are IN GENERAL. I think POOR. The fact the the BUBBLE has continued to grow (in my view) is and should be an irrelevant fact to value investors. Many stocks are just more overvalued than before. I am giving no advice at all. At my page I just explain where we are in relation to history, some valuation issues that are not getting adequate coverage (like stock option compensation) and that sort of stuff. I also like to discuss valuation theory. To me, understanding this stuff makes for better investing and I appreciate when someone points things out to me too. I think that understanding the banking system can only help even if it generally has little to do with the values.
>>Everyday there are new lows being made in some stocks. If alleged value investors cannot or will not find at least a few of these stocks as undervalued, then it's my belief that these folks are not really value investors - Buffett investors maybe, or something else investors - but not value investors. That again of course, is in my opinion. Paul Senior<<
You are correct. No doubt. But the issues of BUBBLE level consumption, Pensions, stock option compensation, and investment theory are still applicable to those stock too if we are trying to get at real bargains.
I would love to hear YOUR ideas on how to value companies. But I have little interest in specific companies because of my own limited area of comfort.
Wayne |
