Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (46654)	2/16/2012 10:32:21 PM
From: Spekulatius	Respond to of 78758

yep NSRGY was never a real value stock. my first buy was at a 14x PE. I believe I have almost a tripple on this first buy (this position still sits in one of my accounts: Message 19110144 For a lifetime stock, quality and consistency beats valuation.In my opinion, it's better to buy NSRGY at a PE of 16 (which is the current valuation) than a mediocre company at a 12x PE. MGDDY (which I own) would not be in the cards for a lifetime stock, due to being too cyclical. JNJ looks good and I think NSRGY is an even better business. of course you would never want to pay let' say 25-30x earnings for a business like NSRGY, that would set you up for a long period of subpar returns but as long as the valuation is just OK, one should do fine. Sometimes, all I think I would need to do is buy these kind of stocks at good prices, which do come up every couple of years. In the meantime just let the money accumulate in bonds or something similar. During the financial crisis in 2009, NSRGY could have been bought at 11x earnings - I got some but clearly not enough. That lot is up almost 2x, same than the SP500 from the lowest value but with much lower risk, imo. in fact NSRGY even during the financial crisis, never skipped a beat and increased their earnings and dividend. FWIW, they just released their Y2011 earnings and those were excellent again (earnings up ~8%, nice topline growth etc.).

To: Paul Senior who wrote (46654)	2/17/2012 12:13:21 AM
From: Jurgis Bekepuris	Read Replies (2) \| Respond to of 78758

It is a key point. If you are buying without doing valuation analysis, you are no better than Gorilla Gamers. And we all know how that ended. OTOH, Clownbuck is completely self contradicting when he says 14PE and never was a value stock in the same sentence. 14PE can be a value stock. 20PE can be a value stock. A stock with no valuation analysis though is not a value stock. It is a belief investment. A belief in management, a belief in brand, a belief in demand or whatever. I refuse to do belief investments, but you guys can do what you want. And BTW, when Brian mentioned DELL, he made a great point without noticing it: most of lifetime stock successes are small caps that grow fast and more than anyone has expected. The megacaps like NSRGY or KO or JNJ may have been lifetime stocks. They won't be such in the future. It is impossible to grow at tremendous rates at these sizes. On the third hand, it is very hard to value small cap growth story and predict where it will end up. But once again, just refusing to do the valuation because it's hard, is a road to a lot of lost money.