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

To: Julius Wong who wrote (62237)	7/26/2019 7:10:11 PM
From: Graham Osborn	Respond to of 78768

I was actually making the exact same comparison in conversation last week. That's exactly what it feels like. All the capital is getting sucked up by the big liquid names (think Nasdaq Big 5), while the smaller/ less liquid stuff is getting dumped. I do believe the Big 5 are mostly excellent companies, but they are also huge companies that are slowing down and in many cases competing with one another for the same business. Back in the late 90s you had this reflexive effect where all the tech companies had wonderful growth -> which boosted their stock prices -> which gave them currency to give business to other technology companies or make acquisitions -> which boosted prices further -> and so on. So you saw the growth happening fundamentally, but at the same time it wasn't real secular growth. It was a capital-induced mirage. That's my theory for why Microsoft, Oracle, Cisco, and various others suddenly broke down right about the time the bubble popped. Obviously there was some accounting stuff going on as well. But you could have been a perfectly vendor of any of those companies and gotten smashed (fundamentally) in the tech bubble because your customers no longer had Supercurrency to buy your product. P/ E's don't mean much for tech companies these days. Earnings exclude CapEx. Free cash flow excludes stock-based comp. The Big 5 are far more expensive than they appear. I remember reading some old Burry posts on that subject and found them: siliconinvestor.com siliconinvestor.com

To: Julius Wong who wrote (62237)	7/26/2019 7:34:20 PM
From: Spekulatius	Read Replies (2) \| Respond to of 78768

Value Stocks Haven't Traded This Low Since the Dot-Com Bubble Note that this valuation is relative. I also think that most value indexes screw towards P/B which is a questionable metric and becomes more questionable as time passes. I recently added to my GOOG position, as it hit almost the $1000 threshold again and made it one of my largest positions together with CMCSA and BRK.B. The Logic was quite simple, a stock with a~ 20x PE growing about 20% with net cash and dominating the market is just too cheap in this market. Another one where I decided to pay up a bit more is microcap LAACZ, which I bought back around 2012. That’s a Real Estate partnership that found to be quite well managed over the years. I bought some shares at more than twice the price that I paid back then and feel, I got a decent value.