Many new ‘disruptive’ businesses are simply older-style businesses dressed up, and even if it’s an attractive and ultimately profitable new space, competitors will join the party.
Tag Archives | value investing
Value and contrarian investors often buy shares in companies rejected by the market, which makes it the hardest way to invest. It looks great when it works but idiotic when the market continues to disagree.
The past few years have seen strong performance for Momentum and Growth strategies but poor outcomes for some with a Value bias. But is Value really due for a comeback as many people are arguing?
The idea that stocks should be divided into growth and yield categories diverts us from fundamentals. Intrinsic value eventually manifests in higher cash flow, whether or not share price appreciation anticipates it.
Macro trends are almost impossible to forecast, and picking undervalued shares with an eye to the long term is a better way. But often, stock selection requires resilience in the face of criticism.
The concept of factor investing has been around for decades and features in many portfolios. A considered and patient use of factors can enhance investment performance but not short term in all market conditions.
Long-term earnings matter the most to stock prices over the long run. Trying to time short-term fluctuations is folly, but we can pick the times when movements are disharmonious with earnings.
Market fundamentals are pointing toward an era of high volatility and lower returns, which have not been factored into current prices. Better to wait till there is blood in the streets rather than be fully invested.
In today’s investment markets, has value investing lost its relevance or did the recent market volatility provide a warning? Value investors need patience and a contrarian attitude, which tests the resolve in strong markets.
Price is what you pay when you buy an asset, and value is what you get. Market price and the intrinsic value of a good or a company share are two different qualities.
Don’t extrapolate success without anticipating new ideas and competition. When consolidation of media power, personal data, or capital is concentrated in a few companies, society repels and rejects.
At any point in the cycle, the portfolios of either the optimists or the pessimists perform better. Despite stretched valuations and rising rates, the optimists are winning at the moment.
Value investing compares the estimated intrinsic value of a company with its market value, and although growth and value go in cycles, there are signs that some value stocks are at attractive levels.
Value investing is not just about a low P/E or EV/EBITDA. Other metrics need to be considered to prevent falling into a value trap, as well as what challenges are facing the industry and the time frame allowed for success.
Despite value investing struggling over the last decade, using free cash flow can generate outperformance with lower volatility compared to traditional classifications of value including earnings, book value and dividends.
Despite most Australian shares trading above intrinsic value, investors’ risk perceptions are lower than they should be. Without profit growth, equity returns will be low, especially if the entry share price is elevated.