One of the chief benefits of value investing is the pleasant feeling of smugness it incites in its practitioners. The impression created among value investors is that we are really the only people who know or care about valuation or fundamental analysis, or who have the slightest hope of achieving long-term investment success. Well, on […]
Now that Easter is over and the spiritual affairs of the world are in order, we may look again at temporal matters. And when it comes to temporal matters, a coming trade war with China is a big one. We now read that there is pressure on the administration to declare China a currency manipulator, […]
Montier, in his Value Investing, spoke of the folly of looking at the price/sales ratio, which, considering the variety of earnings margins and capital structures, makes companies more or less incomparable with each other. He described it as nothing more than a transparent attempt to go up the income statement until the company looks good. […]
I was discussing value investing on a forum I frequent, and an objection someone raised to value investing is that everything that is knowable about a company is rapidly processed and analyzed by people who are smarter than you and have larger resources and bigger staffs. In other words, that markets are efficient, although he […]
The SEC, naturally embarrassed about letting Bernie Madoff get away with it for a mere 14 years, has taken to putting press releases on its homepage announcing their upcoming securities fraud actions. This one, though, is particularly good. SEC Charges Nationally Known Psychic in Multi-Million Dollar Securities Fraud Now, securities fraud violations are like potato […]
Some of my more loyal reader(s) will recall that one of the very first stocks I suggested on our site was Qwest, on the grounds that it had on the order of $750 million in depreciation expenses that was not being made up for with additional capital expenditures. Considering that the firm has a P/E […]
They do say that small cap companies, which are not commonly followed by Wall Street analysts or even portfolio managers for a variety of economic reasons, are a fertile hunting ground for underpriced stocks. Although this effect has somewhat diminished since it was discovered, as most facts on Wall Street inevitably are (apart from the […]
I recently purchased Value Investing by Montier. It’s an interesting book, but it seems to focus more on behavioral finance issues and value investing philosophy than actual techniques. Now, of course, no one describes their investing style as “behavioral finance,” but to a large degree every investment philosophy depends on exploiting some mistake that most […]
I have spoken highly in the past of a stock selling for less than its net working capital with the additional criterion that the firm be profitable. On top of the attractiveness of the stock recovering at least to its asset value, the net working capital level serves as a price floor, thus reducing the […]
The trouble with getting in on the ground floor of a new technology is that you never know how tall the building is going to be. Too many investors confuse technological brilliance with competitiveness, and a typical example of that is Rentech Inc. On the whole I’ve never been too excited about technology for its […]