Posts filed under “Valuation”
This time of year, newspapers and magazines are filled with predictions and stock recommendations and trading ideas. I have repeatedly explained why these are terrible ideas and you should ignore them.
Sometimes, you just have to let the performance speak for itself. And for that, I present Fortune: 10 Stocks To Last The Decade A few major trends will likely shape the next ten years. Here’s a buy-and-forget portfolio to capitalize on them.
August 14, 2000
1. Nokia (NOK: $54)
2. Nortel Networks (NT: $77)
3. Enron (ENE: $73)
4. Oracle (ORCL: $74)
5. Broadcom (BRCM: $237)
6. Viacom (VIA: $69)
7. Univision (UVN: $113)
8. Charles Schwab (SCH: $36)
9. Morgan Stanley Dean Witter (MWD: $89)
10. Genentech (DNA: $150)
Closing prices December 19, 2012:
1. Nokia (NOK: $4.22)
2. Nortel Networks ($0)
3. Enron ($0)
4. Oracle (ORCL: $34.22)
5. Broadcom (BRCM: $33.28)
6. Viacom (VIA: $54.17)
7. Univision ($? )
8. Charles Schwab (SCH: $14.61)
9. Morgan Stanley Dean Witter (MWD: $14.20)
10. Genentech (Takeover at $95 share)
The portfolio managed to lose 74.31%, with 3 bankruptcies, one bailout, and not a single winner in the bunch. Even the Roche Holdings takeover of Genentech was for 37% below the suggested purchase price. The lesson is that valuation matters.
(Update: Forgot about Univision takeover — I’ll pull the TO price and recalculate when I get into the office)
(Update 2: Yeah, I forgot about Oracle 2 for 1 split — I’ll adjust that as well Broadcom 3 to 2 split)
Had you merely bought the S&P500 index via the Spyders, you would have seen a gain of 23.43%.
Have fun forecasting!
Apprenticed Investor: The Folly of Forecasting (TheStreet.com, 06/07/05)
2008 Investment Guides Are HILARIOUS (December 31st, 2008)
UPDATED: Worst Predictions for 2008 (December 31st, 2008)
Investing in 2012: Get ahead of forecaster folly (WaPo, December 30 2011)
10 Stocks To Last The Decade
By David Rynecki FORTUNE Magazine, August 14, 2000
hat tip Market Folly
Published on Nov 27, 2012
William Ackman: Everything You Need to Know About Finance and Investing in Under an Hour.
WILLIAM ACKMAN, Activist Investor and Hedge-Fund Manager
We all want to be financially stable and enjoy a well-funded retirement, and we don’t want to throw out our hard earned money on poor investments. But most of us don’t know the first thing about finance and investing. Acclaimed value investor William Ackman teaches you what it takes to finance and grow a successful business and how to make sound investments that will grant you to a cash-comfy retirement.
Source: Vanguard Over the weekend, I set the Closer Look at Mythology graphic to post early this morning. By sheer coincidence, Meb Faber pointed us to the above chart from Vanguard looking at the correlation between traditional valuation metrics and subsequent investment returns. Given the serendipity of how similar the messages were in both,…Read More
Brett Arends has an interesting article over the weekend about timing the market: It’s Time to Time the Market. After giving the usual reasons why market timing doesn’t work, he mentions an approach that is similar to my own: Using valuation and sentiment to make tactical adjustments (Incidentally, “Tactical” is the new buzzword amongst brokers…Read More
Click to enlarge: Source: Bloomberg Fascinating comparison between Google and Microsoft gains since their IPOs from Dave Wilson. Earlier this month, Google managed to slip past Mister Softee in terms of market cap (MSFT is now $244.8B vs GOOG $243.56B). Microsoft Corp.’s stock-market performance during its first eight years as a public company far surpassed Google. MSFT…Read More
Fascinating set of cycle charts from Merrill looking at earnings, and how being too early when timing value stock purchases is even worse than being too late! Earnings Life Cycle Click to enlarge: Merrill explains: “Value traps are industries that fall into the portion of the earnings expectation life cycle labeled Bad Value. These…Read More