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

To: E_K_S who wrote (76649)	12/7/2024 4:18:32 PM
From: Paul Senior	1 Recommendation Recommended By Harshu Vyas Read Replies (1) \| Respond to of 78525

Lot of food to digest in this post, EKS. I'll start with a few comments: I don't like this "margin of safety" determination by Gurufocus that seems to rely on DCF calculations for all stocks. For a margin of safety It just seems to me there should be something I can see like in cash value, tangible book value, sum-of-parts analysis , value of contracts, etc. To get from a DCF calculation that there's a margin of safety now of 8% with TGT, seems simplistic and wrong to me. That TGT can and maybe will fluctuate 8% or more from here, yes. But 8% margin-of-safety seems wrong given TGT's long reach and long history. I don't view calculation of fair value as the point above which is a negative margin of safety and below which there is a margin of safety. We know the famous "stocks can remain undervalued longer than you can remain solvent", and maybe we need something on the other side. Like stocks can stay overvalued longer than you can stay patient. Something related to Munger's comment to a question that yes, his Costco was overvalued, and yes, he nevertheless had no intention of ever selling it. For me, like WMT here. Even though the calculation of margin-of safety is so negative, I ignore such and continue with set-and-forget for my few shares. For value stocks, I have said I prefer and I try to sell when they become fully-valued by my view. Not before. (unless I've waited maybe two years with no business/stock progress). For some stocks that are not typical value stocks or are just so growthy vs. value, like WMT, COST, et. al., I have moved to Munger's view. Using DCF margin-of-safety to make buy/sell decision here, can be harmful to pocketbook!

To: E_K_S who wrote (76649)	12/8/2024 8:42:27 AM
From: Madharry	1 Recommendation Recommended By Harshu Vyas Respond to of 78525

. analysts are barely able to accurately predict earnings one year into the future let alone several and on top of that according to you the model uses the same discount irrespective of the predictability of future cash flows. Now I think that future cash flows are becoming less and less predictable because the rate of change around us is increasing and on top of that climate is now increasingly becoming a factor as is the lack of stabliity in geopolitics. we could do an exercise and have each participant pick any company they want and predict what the earnings will be in five years. and then look back and see what the variance is. I was in a store yesterday and I was looking at canned soups and they were selling for $3 to $5 for a small can of soup and I was wondering who was buying that. I certainly did not envision the inflation we are experiencing now 5 years ago .