Long term value investing

Jesus · Nov 30, 2009

Quote from The Big D:

Neither of those would be value investing by the classic definition.

Berkshire DOES value investing, but their own stock in not a value investment in and of itself.

AAPL is yet another tech company that never intends to pay off the investors in any way, shape or form if management can help it.

A value investment is in the eye of the beholder. If you deem Berkshire or AAPL to be trading well below its intrinsic value, then they are value investments. If you Don't think they are trading below their intrinsic value, then they are not.

Also,
A "classic" definition from investopedia.

"The strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued."

The Big D · Nov 30, 2009

Quote from Jesus:

A value investment is in the eye of the beholder. If you deem Berkshire or AAPL to be trading well below its intrinsic value, then they are value investments.

You missed the definition of 'intrinsic value' already posted in this thread. Go back to that, and then compute the intrinsic value of those two stocks. It's not hard to do

What you will find is that it's impossible for BRK or AAPL to trade below their intrinsic value because that value is zero.

The Big D · Nov 30, 2009

Here's a handy link in case you missed the previous post:

http://en.wikipedia.org/wiki/Intrinsic_value_(finance)

mastertrader12 · Nov 30, 2009

Blue Bull, I think he means to allow for the potential downtrend and the possible luck of the right feel for the investment.

Jesus · Nov 30, 2009

Quote from The Big D:

You missed the definition of 'intrinsic value' already posted in this thread. Go back to that, and then compute the intrinsic value of those two stocks. It's not hard to do

What you will find is that it's impossible for BRK or AAPL to trade below their intrinsic value because that value is zero.

Really!

So Apple and Berkshire Hathaway are worth zero. OK. Thats what you just said.

First of all, Berkshire owns plenty of businesses and stocks that pay dividends to them. So by your ludacris definition of value (dividends and only dividends), Berkshire is at least worth the dividends it gets paid. When you buy Berkshire you are buying the companies they own, several of which pay dividends, so you are buying dividends. So it cannot be worth zero unless all its companies cease their dividends.

Apple is also worth zero as well! So, if Steve Jobs drove to your house or apartment or whatever, and said we will give you the whole company for 100 dollars, but you can't sell the company as a whole to anybody else. You can take Apple private, and have rights to the assets, liabilities (almost none in Apple's case), and the future earnings that apple gets from all the little iphones they sell. But you cannot flip it to somebody for 200 dollars or any other amount. If Steve made you that offer, you would refuse, right? Because according to you, apple is worth zero, because they don't pay dividends. Its only worth money if some other "fool" will buy it from you for more, right?

You are a moron. I seriously hope you stick to trading and never INVEST a dime.

The Big D · Nov 30, 2009

Quote from Jesus:

Really!

So Apple and Berkshire Hathaway are worth zero. OK. Thats what you just said.

No, I said they have an intrinsic value of zero. Intrinsic value is a term with a very specific definition, which has been posted twice now from two different sources and if you refuse to use it then I can only conclude you're either being intentionally obstructionist or have problems with reading comprehension.

Intrinsic value is THE underlying concept behind value investing. Until you do your reading and understand it, you can't participate in a conversation about value investing.

Sell 'em · Nov 30, 2009

"Big D" is completely clueless, yet he speaks with certainty. But I guess this is the type of thread on value investing we should expect on ET right?

I could get into this discussion, but it is just not worth my time. Only this one observation:

Certain 'deep value' investors focus on 'cigar butt' opportunities. These may be companies going through bankruptcy, companies earning below the cost of capital, companies with no history or prospect of paying a dividend from operating income. For a value investor there can be many reasons to buy such a company. Anyone who has read Security Analysis would know this. Its funny how so many want a shortcut to learning how value investing works. Turn off ET and read the book - it really is (almost) that simple.

Index piker · Nov 30, 2009

Quote from Blue_Bull:

I realize most of you are probably short term traders, but I you probably still have an opinion on this -

Do you think that the market is less efficient when it comes to long term value picks? So example, a company may be undervalued and rise like, 100% in 5 years. But because of the 5 year time frame, nobody wants to touch it right now. Is that logical?

Also, I think this topic came up recently on ET, but is there a good site equivalent to ET but focused more on "pure investing," rather than trading?

I'm just trying to learn multiple aspects, but I find that too many forums are loaded with spam and crap.

Best investing information forum period.
http://www.bogleheads.org/forum/viewforum.php?f=10&sid=1cbc402625dd9cb8bef2967c4bc302be

The Big D · Dec 1, 2009

Quote from Sell 'em:

"Big D" is completely clueless, yet he speaks with certainty. But I guess this is the type of thread on value investing we should expect on ET right?

I could get into this discussion, but it is just not worth my time. Only this one observation:

Certain 'deep value' investors focus on 'cigar butt' opportunities. These may be companies going through bankruptcy, companies earning below the cost of capital, companies with no history or prospect of paying a dividend from operating income. For a value investor there can be many reasons to buy such a company. Anyone who has read Security Analysis would know this. Its funny how so many want a shortcut to learning how value investing works. Turn off ET and read the book - it really is (almost) that simple.

Given that the definition I provided is taken DIRECTLY out of the book you claim we should read instead, I have to seriously question if you yourself have read it.

Carry on. After all, you don't have time for this.

Ghost of Cutten · Dec 1, 2009

Quote from The Big D:

You missed the definition of 'intrinsic value' already posted in this thread. Go back to that, and then compute the intrinsic value of those two stocks. It's not hard to do

What you will find is that it's impossible for BRK or AAPL to trade below their intrinsic value because that value is zero.

Here's a bit of advice that will help you in life - no one wants to hear the ridiculous opinions of a moronic pedant. So kindly do us all a favour and fuck off.