Value Investing Pro

“Those who cannot learn from history are doomed to repeat it.”- George Santayana

With the market’s run up from its March lows, I have become a bit nervous about where the market is headed. You have to be. While the upside is nice, the downside is equally as brutal. The really bad part about today’s market is the lack of opportunities. I find it hard to believe certain bloggers are finding so many bargains. I recently read a blog where it seemed every blog post included a buy recommendation, are you kidding me? I have looked at almost 200 stocks in the past month, and only 2 are bargains, or semi-bargains as I like to call them as they weren’t my required 50% margin of safety, but are cheap enough where they might merit a purchase. Other than that, I will continue to turnover rocks.

Where are the stock market bargains?

While I haven’t found any bargains in my weekly magic formula investing screen, I have been fishing deeper in the waters looking for the old school Ben Graham types of stocks where current assets are greater than total liabilities. I used to almost exclusively focus on these types of stocks which Ben Graham called “Net-Net’s”. You  have to love net-nets, its about as sure thing there is in the market, I mean its like getting a free business if you think about it. Only problem, there are net-nets for a reason and that’s one thing that turns me off. Also, I wouldn’t run a concentrated portfolio around Net-Net strategy. I would take the Walter Schloss approach and have 100 stock portfolio. But this method takes time and its simply something I do not have right now. So I’m simply sticking with my magic formula investing strategy.

Magic Formula Investing Today

The process is pretty simple, search for magic formula stocks, research, make a decision. Now, the problem that has arisen lately is there has been a lot of searching and searching, but no buys. I’m being patient but I’m also being cautious. I’m selling when stocks approach my estimate of fair value. While I could easily keep some of these stocks I’m selling as they might continue to run up, that’s playing the greater fool theory, a game in which I have no experience in and most likely have a major disadvantage. The only problem with this strategy is that as I’m selling stocks as they approach my estimate of fair value, I’m increasing my cash which is currently about 30%. And if you have 30%+ cash, you will find it very hard to move the needle.

1929 Stock Market Crash

I thought it would be nice to revisit history and search for videos on the 1929 Stock market Crash. While watching these videos, the one word that came to mind is panic. In a situation where panic exists, you could either panic with the rest of the crowd or remain patient and take advantage of the panic. Anyway, I thought these videos were very informative.

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.