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

To: Paul Senior who wrote (46733)	2/23/2012 9:31:31 PM
From: E_K_S	2 Recommendations Respond to of 78750

Hi Paul - Re: Graham Number My application is a modified Graham Number as I do not look at the 20 year "uninterrupted" dividend payment history or 10 years of positive earnings. I am looking at the tangible BV as this information is now available. Earnings are very important but I may take exception if analysts are positive on their future estimate(s), past earnings are positive for the last 5 years and/or there are reasonable explanations for one time adjustments that may have resulted in a one time loss over the last 5 years. I further refine my Modified Graham Number (MGN) with my net annual earnings to LT debt filter <=4. I am finding that many cyclical companies fall out of the analysis as these companies may have losses during the course of the business cycle. Therefore, I may make an exception to my MGN calculation "rules" to include one of these types of companies (may include Chemical and/or Steel sectors). So maybe a better name for my value screen process is the EK$ value Number. It does make me a disciplined buyer of value using a calculated approach for determining what I consider to be under valued. So I agree with Graham that my approach is a defensive one ( especially in this current environment). I will continue to use it (or a modified version) as long as I can find candidate stocks to buy. In the future I will note my fair value price as the EK$ fair value number. What is interesting is that your "heuristic" stock buy points (for those you post) for the most part provide undervalued alerts when compared to my EK$ fair value number. So when used for Buy entry points both approaches appear to trigger the same "value" alert flag. ----------------------------------------------------------------------------------------------- Re: Palm Oil One of the biggest uses in the last five years for Palm Oil is as a bio-fuel substitute for diesel (ie bio-diesel). As a cooking oil, it is very high in cholesterol especially the bad stuff saturated fats. I suspect BG is looking at Palm Oil in Brazil to complement their sugar cane ethanol production as part of their expansion into bio-fuels. EKS

To: Paul Senior who wrote (46733)	2/23/2012 10:47:14 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78750

re LM - the problem is that LM's equity and income funds have to compete with ETF (from Blackrock and State Street or Vanguard) that have a 0.2% expense ratio typically. Since they don't outperform those, the asset start to migrate out. Now if you accept that ETF or index funds are the future and those have 0.2% expense ratios than paying 2% for assets is too high - that would be 10x revenues. That is one underlying reason why mutual fund companies with bad performance are underperforming. Some like Troweprice are shielded because they have some well performing funds and a 401k business. LM has neither so it is going to succumb to the ETF crowd and/or has to lower their fund charges quite a bit.