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

To: Paul Senior who wrote (61845)	3/29/2019 2:45:08 PM
From: Graham Osborn	Read Replies (1) \| Respond to of 78782

Wertheim's method is pretty similar to Fisher - look for consistent sales growth, investment in R&D. Don't be too price-sensitive. It's been a while since I've read Common Stocks and Uncommon Profits but I'll have to go back and reread it. It looks like several of his best buys were in the 1980s. As you say, Heico ended up being about half his net worth. There was nothing in the financial performance of that company back then to suggest it would become a powerhouse later - flat sales, lots of debt, and a stock price that went nowhere for 10 years. Microsoft and Apple were companies that would have been just as recognizable to folks on this thread as Google and Facebook are today - with the caveat that they were relatively small companies relative to their total achievable market size (hard to say what that is for Google and Facebook, but they say that total world advertising spend is 500B and the two have combined sales of nearly 200B - perhaps they will start to look outside advertising for growth? Microsoft's revenue was 100M at IPO and is 100B today). Those 2 stocks account for another quarter of his net worth. I'm sure he invested in many, many stocks that went nowhere. Whether he was a stock market genius is unclear. His recent buys don't look like much to me. But it does illustrate the value of focusing on companies with good secular growth prospects and holding them "until death do us part." And of making bets continuously, year after year. And it probably means investing in private markets since companies nowadays wait so long to IPO. As you say, I think Graham's greatest contribution was teaching regular investors how to avoid the mistakes of the 20s.