Value Investing

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

Thanks Barry for the detailed reply which I greatly appreciate.

#4 : My idea of a value on a stock is also based on EPS. If I can get a return more than the CD rate I can safely get from a bank, I will consider it 'value'. If you take the case TSM, the EPS is 6.26 and the stock is at 88 which makes it 8%. However, if you take the case of MSFT 8.8/~250 = 3.5 which is lower than the current CD rate of 4% which makes it not 'value'. If you evaluate this way, most of the stocks are not 'value'. Moreover, almost half of the companies have negative EPS this year and many are not expected to earn any next year either.    

#6 

Thanks again for the response.

-Vinod

------------------------------
vNu

Original Message:
Sent: 03-13-2023 13:41
From: BARRY JOHNSON
Subject: Is there value anywhere?

Original Message:
Sent: 3/12/2023 10:11:00 PM
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

When things seem at their absolute worst is the best time for buying equities. There are tons of low P/E stocks out there (and low P/S, which I prefer, as well). Most of them are smaller companies, and small companies in general have been left behind the rest of the market for many years now. If and when they'll catch up is anybody's guess.

------------------------------
Rob Adams

Original Message:
Sent: 03-13-2023 17:29
From: Vinod Nair
Subject: Is there value anywhere?

Thanks Barry for the detailed reply which I greatly appreciate.

#4 : My idea of a value on a stock is also based on EPS. If I can get a return more than the CD rate I can safely get from a bank, I will consider it 'value'. If you take the case TSM, the EPS is 6.26 and the stock is at 88 which makes it 8%. However, if you take the case of MSFT 8.8/~250 = 3.5 which is lower than the current CD rate of 4% which makes it not 'value'. If you evaluate this way, most of the stocks are not 'value'. Moreover, almost half of the companies have negative EPS this year and many are not expected to earn any next year either.    

#6 

Thanks again for the response.

-Vinod

------------------------------
vNu

Original Message:
Sent: 03-13-2023 13:41
From: BARRY JOHNSON
Subject: Is there value anywhere?

Original Message:
Sent: 3/12/2023 10:11:00 PM
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Rob - I think the direction of the general market is more important now than before. In addition to P/E and P/S another important consideration should debt. 

When things seem at their absolute worst is the best time for buying equities. There are tons of low P/E stocks out there (and low P/S, which I prefer, as well). Most of them are smaller companies, and small companies in general have been left behind the rest of the market for many years now. If and when they'll catch up is anybody's guess.

------------------------------
Rob Adams

Original Message:
Sent: 03-13-2023 17:29
From: Vinod Nair
Subject: Is there value anywhere?

Thanks Barry for the detailed reply which I greatly appreciate.

#4 : My idea of a value on a stock is also based on EPS. If I can get a return more than the CD rate I can safely get from a bank, I will consider it 'value'. If you take the case TSM, the EPS is 6.26 and the stock is at 88 which makes it 8%. However, if you take the case of MSFT 8.8/~250 = 3.5 which is lower than the current CD rate of 4% which makes it not 'value'. If you evaluate this way, most of the stocks are not 'value'. Moreover, almost half of the companies have negative EPS this year and many are not expected to earn any next year either.    

#6 

Thanks again for the response.

-Vinod

------------------------------
vNu

Original Message:
Sent: 03-13-2023 13:41
From: BARRY JOHNSON
Subject: Is there value anywhere?

Original Message:
Sent: 3/12/2023 10:11:00 PM
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Vinod, if you can tell what direction the general market is heading tomorrow, you're far smarter than I am. All I ever know about the market is where it is now relative to where it's been. Prognosticators are always predicting either doom and gloom or "we're going to the moon!" NOBODY knows when the next bull or bear will start--or end. That's why I stay 100% invested in equities 100% of the time. It's worked well for me for the past 40+ years.

------------------------------
Rob Adams

Original Message:
Sent: 03-14-2023 15:51
From: Vinod Nair
Subject: Is there value anywhere?

Rob - I think the direction of the general market is more important now than before. In addition to P/E and P/S another important consideration should debt. 

------------------------------
vNu

Original Message:
Sent: 03-14-2023 10:24
From: ROBERT ADAMS
Subject: Is there value anywhere?

When things seem at their absolute worst is the best time for buying equities. There are tons of low P/E stocks out there (and low P/S, which I prefer, as well). Most of them are smaller companies, and small companies in general have been left behind the rest of the market for many years now. If and when they'll catch up is anybody's guess.

------------------------------
Rob Adams

Original Message:
Sent: 03-13-2023 17:29
From: Vinod Nair
Subject: Is there value anywhere?

Thanks Barry for the detailed reply which I greatly appreciate.

#4 : My idea of a value on a stock is also based on EPS. If I can get a return more than the CD rate I can safely get from a bank, I will consider it 'value'. If you take the case TSM, the EPS is 6.26 and the stock is at 88 which makes it 8%. However, if you take the case of MSFT 8.8/~250 = 3.5 which is lower than the current CD rate of 4% which makes it not 'value'. If you evaluate this way, most of the stocks are not 'value'. Moreover, almost half of the companies have negative EPS this year and many are not expected to earn any next year either.    

#6 

Thanks again for the response.

-Vinod

------------------------------
vNu

Original Message:
Sent: 03-13-2023 13:41
From: BARRY JOHNSON
Subject: Is there value anywhere?

Original Message:
Sent: 3/12/2023 10:11:00 PM
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Rob - I am still working on it. Predicting market direction that is. 😁

I too believed that staying invested is the right thing to do. I also believed that index investing is the best approach. 

However, I am starting to question those beliefs. 

Do you think the low interest rate and its downward trajectory would have helped stock market in the last 40 years?

I those trends in interest reverses in the next decade, how will those be reflected in stock valuation?

------------------------------
vNu

Original Message:
Sent: 03-14-2023 17:29
From: ROBERT ADAMS
Subject: Is there value anywhere?

Vinod, if you can tell what direction the general market is heading tomorrow, you're far smarter than I am. All I ever know about the market is where it is now relative to where it's been. Prognosticators are always predicting either doom and gloom or "we're going to the moon!" NOBODY knows when the next bull or bear will start--or end. That's why I stay 100% invested in equities 100% of the time. It's worked well for me for the past 40+ years.

------------------------------
Rob Adams

Original Message:
Sent: 03-14-2023 15:51
From: Vinod Nair
Subject: Is there value anywhere?

Rob - I think the direction of the general market is more important now than before. In addition to P/E and P/S another important consideration should debt. 

------------------------------
vNu

Original Message:
Sent: 03-14-2023 10:24
From: ROBERT ADAMS
Subject: Is there value anywhere?

When things seem at their absolute worst is the best time for buying equities. There are tons of low P/E stocks out there (and low P/S, which I prefer, as well). Most of them are smaller companies, and small companies in general have been left behind the rest of the market for many years now. If and when they'll catch up is anybody's guess.

------------------------------
Rob Adams

Original Message:
Sent: 03-13-2023 17:29
From: Vinod Nair
Subject: Is there value anywhere?

Thanks Barry for the detailed reply which I greatly appreciate.

#4 : My idea of a value on a stock is also based on EPS. If I can get a return more than the CD rate I can safely get from a bank, I will consider it 'value'. If you take the case TSM, the EPS is 6.26 and the stock is at 88 which makes it 8%. However, if you take the case of MSFT 8.8/~250 = 3.5 which is lower than the current CD rate of 4% which makes it not 'value'. If you evaluate this way, most of the stocks are not 'value'. Moreover, almost half of the companies have negative EPS this year and many are not expected to earn any next year either.    

#6 

Thanks again for the response.

-Vinod

------------------------------
vNu

Original Message:
Sent: 03-13-2023 13:41
From: BARRY JOHNSON
Subject: Is there value anywhere?

Original Message:
Sent: 3/12/2023 10:11:00 PM
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Vidnod, I'm not overly fixated on dividends, i don't necessarily relate it to value, I have stocks with zero dividend I consider to be excellent values (relative to forward PE and book value).    A dividend certainly doesn't hurt though! Recently I've been all over DOW dog Verizon, buying shares and leap calls (Jan 2025 30's. below $8.00).   Share price $36.80, divi  $2.61;  yield currently 7.1%, Forward PE 8.1

Any determination of value based on the share statistics has be backed up by knowledge that the company's earnings are growing not declining.  Unless they're stable and you're just of the belief earnings multiple alone can provide sufficient growth.  If earnings collapses, that PE that looked so good explodes upward.  With a megacap like this, earnings typically don't grow a whole lot but I'm typically looking for a 1-2 year investment with 30-50% share price growth potential.

------------------------------
JOSHUA

Original Message:
Sent: 03-12-2023 22:10
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Hi Joshua - VZ does look like a good value play. At least compared to T-Moble and AT&T. What do you think about comcast? They are trying to enter the same market. Their numbers too look good to me.

------------------------------
vNu

Original Message:
Sent: 03-14-2023 12:42
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vidnod, I'm not overly fixated on dividends, i don't necessarily relate it to value, I have stocks with zero dividend I consider to be excellent values (relative to forward PE and book value).    A dividend certainly doesn't hurt though! Recently I've been all over DOW dog Verizon, buying shares and leap calls (Jan 2025 30's. below $8.00).   Share price $36.80, divi  $2.61;  yield currently 7.1%, Forward PE 8.1

Any determination of value based on the share statistics has be backed up by knowledge that the company's earnings are growing not declining.  Unless they're stable and you're just of the belief earnings multiple alone can provide sufficient growth.  If earnings collapses, that PE that looked so good explodes upward.  With a megacap like this, earnings typically don't grow a whole lot but I'm typically looking for a 1-2 year investment with 30-50% share price growth potential.

------------------------------
JOSHUA

Original Message:
Sent: 03-12-2023 22:10
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Vinod,  the valuation and earnings trend on Comcast looks ok to me, I just like the cellular business a little better.  EVERY person has a cellular phone and account right?  Not every household has cable.  Comcast took a lot of DSL customers but that switchover is probably complete.   I like a dedicated ISP at home, but the trend especially among the young seems to be having cellular-only.  5G may enable these devices to be a whole-house hotspot.  Verizon is also offering wireless home internet services now which competes very well with cable on price and speed (without the channel content cost).  I could be wrong but I just like a cellular company better for those reasons.  What's your view on that?

By the way I don't see AT&T, Verizon, T-mobile as equals when it comes to customer choice.  Everyone has an opinion but in my experience Verizon has better coverage in more areas including 5G now. In other words they don't compete strictly on the basis of plan prices and special offers.

------------------------------
JOSHUA

Original Message:
Sent: 03-14-2023 15:53
From: Vinod Nair
Subject: Is there value anywhere?

Hi Joshua - VZ does look like a good value play. At least compared to T-Moble and AT&T. What do you think about comcast? They are trying to enter the same market. Their numbers too look good to me.

------------------------------
vNu

Original Message:
Sent: 03-14-2023 12:42
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vidnod, I'm not overly fixated on dividends, i don't necessarily relate it to value, I have stocks with zero dividend I consider to be excellent values (relative to forward PE and book value).    A dividend certainly doesn't hurt though! Recently I've been all over DOW dog Verizon, buying shares and leap calls (Jan 2025 30's. below $8.00).   Share price $36.80, divi  $2.61;  yield currently 7.1%, Forward PE 8.1

Any determination of value based on the share statistics has be backed up by knowledge that the company's earnings are growing not declining.  Unless they're stable and you're just of the belief earnings multiple alone can provide sufficient growth.  If earnings collapses, that PE that looked so good explodes upward.  With a megacap like this, earnings typically don't grow a whole lot but I'm typically looking for a 1-2 year investment with 30-50% share price growth potential.

------------------------------
JOSHUA

Original Message:
Sent: 03-12-2023 22:10
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

I sure hope you guys are right about VZ. I just sold a couple of ETFs and used the money to create a modified Dogs of the Dow portfolio with VZ in the mix. So far, I've also accumulated AMGN, BEN, CSCO, CVX, DOW, KMB, MMM, and XOM in that portfolio. I took the highest dividend payers from the Dow 30 and from S&P's Dividend Aristocrats, but I filtered out those with low EBITDA/Enterprise Value and coverage ratios below 1.2. I have a couple more stocks to buy to fill out the mix. 

I plan on holding these stocks until (1) their yield drops below 2.4%, (2) they cut their dividend, or (3) they otherwise run into financial distress.

I'm not betting the farm on this single strategy. It's just a part of my program to pare down my ETFs and create my own portfolios. In the past 10 years, all of my individual stocks have greatly outperformed my ETFs even though all of my ETFs have annualized returns of more than 10% while I've held them. 

I like the diversification ETFs provide, but I think I can achieve a sufficient level of diversification by creating portfolios based on strategies that have worked over many decades. I guess we'll see.

------------------------------
Rob Adams

Original Message:
Sent: 03-14-2023 16:40
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vinod,  the valuation and earnings trend on Comcast looks ok to me, I just like the cellular business a little better.  EVERY person has a cellular phone and account right?  Not every household has cable.  Comcast took a lot of DSL customers but that switchover is probably complete.   I like a dedicated ISP at home, but the trend especially among the young seems to be having cellular-only.  5G may enable these devices to be a whole-house hotspot.  Verizon is also offering wireless home internet services now which competes very well with cable on price and speed (without the channel content cost).  I could be wrong but I just like a cellular company better for those reasons.  What's your view on that?

By the way I don't see AT&T, Verizon, T-mobile as equals when it comes to customer choice.  Everyone has an opinion but in my experience Verizon has better coverage in more areas including 5G now. In other words they don't compete strictly on the basis of plan prices and special offers.

------------------------------
JOSHUA

Original Message:
Sent: 03-14-2023 15:53
From: Vinod Nair
Subject: Is there value anywhere?

Hi Joshua - VZ does look like a good value play. At least compared to T-Moble and AT&T. What do you think about comcast? They are trying to enter the same market. Their numbers too look good to me.

------------------------------
vNu

Original Message:
Sent: 03-14-2023 12:42
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vidnod, I'm not overly fixated on dividends, i don't necessarily relate it to value, I have stocks with zero dividend I consider to be excellent values (relative to forward PE and book value).    A dividend certainly doesn't hurt though! Recently I've been all over DOW dog Verizon, buying shares and leap calls (Jan 2025 30's. below $8.00).   Share price $36.80, divi  $2.61;  yield currently 7.1%, Forward PE 8.1

Any determination of value based on the share statistics has be backed up by knowledge that the company's earnings are growing not declining.  Unless they're stable and you're just of the belief earnings multiple alone can provide sufficient growth.  If earnings collapses, that PE that looked so good explodes upward.  With a megacap like this, earnings typically don't grow a whole lot but I'm typically looking for a 1-2 year investment with 30-50% share price growth potential.

------------------------------
JOSHUA

Original Message:
Sent: 03-12-2023 22:10
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Rob, congrats hope we both do well on VZ.  I'd be cautious about MMM, there are very large liability claims being litigated.  Their attempt to "spin off" and isolate those liabilities was shot down in court.  Some say its priced in but that remains to be seen.    This is an issue I have with using screens, they don't tell the whole story.   They're nothing more than a list of ideas to consider with DD.   Can't speak to the other tickers you mentioned off hand. 

I'm of the same mind I like to pick individual stocks with the best prospects.  I've never owned an ETF in my life there's too much grossly overpriced garbage within them.  If I can cherry-pick my stocks, why wouldn't I?

------------------------------
JOSHUA

Original Message:
Sent: 03-14-2023 18:08
From: ROBERT ADAMS
Subject: Is there value anywhere?

I sure hope you guys are right about VZ. I just sold a couple of ETFs and used the money to create a modified Dogs of the Dow portfolio with VZ in the mix. So far, I've also accumulated AMGN, BEN, CSCO, CVX, DOW, KMB, MMM, and XOM in that portfolio. I took the highest dividend payers from the Dow 30 and from S&P's Dividend Aristocrats, but I filtered out those with low EBITDA/Enterprise Value and coverage ratios below 1.2. I have a couple more stocks to buy to fill out the mix. 

I plan on holding these stocks until (1) their yield drops below 2.4%, (2) they cut their dividend, or (3) they otherwise run into financial distress.

I'm not betting the farm on this single strategy. It's just a part of my program to pare down my ETFs and create my own portfolios. In the past 10 years, all of my individual stocks have greatly outperformed my ETFs even though all of my ETFs have annualized returns of more than 10% while I've held them. 

I like the diversification ETFs provide, but I think I can achieve a sufficient level of diversification by creating portfolios based on strategies that have worked over many decades. I guess we'll see.

------------------------------
Rob Adams

Original Message:
Sent: 03-14-2023 16:40
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vinod,  the valuation and earnings trend on Comcast looks ok to me, I just like the cellular business a little better.  EVERY person has a cellular phone and account right?  Not every household has cable.  Comcast took a lot of DSL customers but that switchover is probably complete.   I like a dedicated ISP at home, but the trend especially among the young seems to be having cellular-only.  5G may enable these devices to be a whole-house hotspot.  Verizon is also offering wireless home internet services now which competes very well with cable on price and speed (without the channel content cost).  I could be wrong but I just like a cellular company better for those reasons.  What's your view on that?

By the way I don't see AT&T, Verizon, T-mobile as equals when it comes to customer choice.  Everyone has an opinion but in my experience Verizon has better coverage in more areas including 5G now. In other words they don't compete strictly on the basis of plan prices and special offers.

------------------------------
JOSHUA

Original Message:
Sent: 03-14-2023 15:53
From: Vinod Nair
Subject: Is there value anywhere?

Hi Joshua - VZ does look like a good value play. At least compared to T-Moble and AT&T. What do you think about comcast? They are trying to enter the same market. Their numbers too look good to me.

------------------------------
vNu

Original Message:
Sent: 03-14-2023 12:42
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vidnod, I'm not overly fixated on dividends, i don't necessarily relate it to value, I have stocks with zero dividend I consider to be excellent values (relative to forward PE and book value).    A dividend certainly doesn't hurt though! Recently I've been all over DOW dog Verizon, buying shares and leap calls (Jan 2025 30's. below $8.00).   Share price $36.80, divi  $2.61;  yield currently 7.1%, Forward PE 8.1

Any determination of value based on the share statistics has be backed up by knowledge that the company's earnings are growing not declining.  Unless they're stable and you're just of the belief earnings multiple alone can provide sufficient growth.  If earnings collapses, that PE that looked so good explodes upward.  With a megacap like this, earnings typically don't grow a whole lot but I'm typically looking for a 1-2 year investment with 30-50% share price growth potential.

------------------------------
JOSHUA

Original Message:
Sent: 03-12-2023 22:10
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

I sure hope you guys are right about VZ. I just sold a couple of ETFs and used the money to create a modified Dogs of the Dow portfolio with VZ in the mix. So far, I've also accumulated AMGN, BEN, CSCO, CVX, DOW, KMB, MMM, and XOM in that portfolio. I took the highest dividend payers from the Dow 30 and from S&P's Dividend Aristocrats, but I filtered out those with low EBITDA/Enterprise Value and coverage ratios below 1.2. I have a couple more stocks to buy to fill out the mix. 

I plan on holding these stocks until (1) their yield drops below 2.4%, (2) they cut their dividend, or (3) they otherwise run into financial distress.

I'm not betting the farm on this single strategy. It's just a part of my program to pare down my ETFs and create my own portfolios. In the past 10 years, all of my individual stocks have greatly outperformed my ETFs even though all of my ETFs have annualized returns of more than 10% while I've held them. 

I like the diversification ETFs provide, but I think I can achieve a sufficient level of diversification by creating portfolios based on strategies that have worked over many decades. I guess we'll see.

------------------------------
Rob Adams

Original Message:
Sent: 03-14-2023 16:40
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vinod,  the valuation and earnings trend on Comcast looks ok to me, I just like the cellular business a little better.  EVERY person has a cellular phone and account right?  Not every household has cable.  Comcast took a lot of DSL customers but that switchover is probably complete.   I like a dedicated ISP at home, but the trend especially among the young seems to be having cellular-only.  5G may enable these devices to be a whole-house hotspot.  Verizon is also offering wireless home internet services now which competes very well with cable on price and speed (without the channel content cost).  I could be wrong but I just like a cellular company better for those reasons.  What's your view on that?

By the way I don't see AT&T, Verizon, T-mobile as equals when it comes to customer choice.  Everyone has an opinion but in my experience Verizon has better coverage in more areas including 5G now. In other words they don't compete strictly on the basis of plan prices and special offers.

------------------------------
JOSHUA

Original Message:
Sent: 03-14-2023 15:53
From: Vinod Nair
Subject: Is there value anywhere?

Hi Joshua - VZ does look like a good value play. At least compared to T-Moble and AT&T. What do you think about comcast? They are trying to enter the same market. Their numbers too look good to me.

------------------------------
vNu

Original Message:
Sent: 03-14-2023 12:42
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vidnod, I'm not overly fixated on dividends, i don't necessarily relate it to value, I have stocks with zero dividend I consider to be excellent values (relative to forward PE and book value).    A dividend certainly doesn't hurt though! Recently I've been all over DOW dog Verizon, buying shares and leap calls (Jan 2025 30's. below $8.00).   Share price $36.80, divi  $2.61;  yield currently 7.1%, Forward PE 8.1

Any determination of value based on the share statistics has be backed up by knowledge that the company's earnings are growing not declining.  Unless they're stable and you're just of the belief earnings multiple alone can provide sufficient growth.  If earnings collapses, that PE that looked so good explodes upward.  With a megacap like this, earnings typically don't grow a whole lot but I'm typically looking for a 1-2 year investment with 30-50% share price growth potential.

------------------------------
JOSHUA

Original Message:
Sent: 03-12-2023 22:10
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Rob - Congrats on your investment returns. That is an impressive list. However, I stay away from financial firms and oil companies. One question: Where do you find EV/EBITDA and coverage ratios?

I sure hope you guys are right about VZ. I just sold a couple of ETFs and used the money to create a modified Dogs of the Dow portfolio with VZ in the mix. So far, I've also accumulated AMGN, BEN, CSCO, CVX, DOW, KMB, MMM, and XOM in that portfolio. I took the highest dividend payers from the Dow 30 and from S&P's Dividend Aristocrats, but I filtered out those with low EBITDA/Enterprise Value and coverage ratios below 1.2. I have a couple more stocks to buy to fill out the mix. 

I plan on holding these stocks until (1) their yield drops below 2.4%, (2) they cut their dividend, or (3) they otherwise run into financial distress.

I'm not betting the farm on this single strategy. It's just a part of my program to pare down my ETFs and create my own portfolios. In the past 10 years, all of my individual stocks have greatly outperformed my ETFs even though all of my ETFs have annualized returns of more than 10% while I've held them. 

I like the diversification ETFs provide, but I think I can achieve a sufficient level of diversification by creating portfolios based on strategies that have worked over many decades. I guess we'll see.

------------------------------
Rob Adams

Original Message:
Sent: 03-14-2023 16:40
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vinod,  the valuation and earnings trend on Comcast looks ok to me, I just like the cellular business a little better.  EVERY person has a cellular phone and account right?  Not every household has cable.  Comcast took a lot of DSL customers but that switchover is probably complete.   I like a dedicated ISP at home, but the trend especially among the young seems to be having cellular-only.  5G may enable these devices to be a whole-house hotspot.  Verizon is also offering wireless home internet services now which competes very well with cable on price and speed (without the channel content cost).  I could be wrong but I just like a cellular company better for those reasons.  What's your view on that?

By the way I don't see AT&T, Verizon, T-mobile as equals when it comes to customer choice.  Everyone has an opinion but in my experience Verizon has better coverage in more areas including 5G now. In other words they don't compete strictly on the basis of plan prices and special offers.

------------------------------
JOSHUA

Original Message:
Sent: 03-14-2023 15:53
From: Vinod Nair
Subject: Is there value anywhere?

Hi Joshua - VZ does look like a good value play. At least compared to T-Moble and AT&T. What do you think about comcast? They are trying to enter the same market. Their numbers too look good to me.

------------------------------
vNu

Original Message:
Sent: 03-14-2023 12:42
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vidnod, I'm not overly fixated on dividends, i don't necessarily relate it to value, I have stocks with zero dividend I consider to be excellent values (relative to forward PE and book value).    A dividend certainly doesn't hurt though! Recently I've been all over DOW dog Verizon, buying shares and leap calls (Jan 2025 30's. below $8.00).   Share price $36.80, divi  $2.61;  yield currently 7.1%, Forward PE 8.1

Any determination of value based on the share statistics has be backed up by knowledge that the company's earnings are growing not declining.  Unless they're stable and you're just of the belief earnings multiple alone can provide sufficient growth.  If earnings collapses, that PE that looked so good explodes upward.  With a megacap like this, earnings typically don't grow a whole lot but I'm typically looking for a 1-2 year investment with 30-50% share price growth potential.

------------------------------
JOSHUA

Original Message:
Sent: 03-12-2023 22:10
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Vinod,  the valuation and earnings trend on Comcast looks ok to me, I just like the cellular business a little better.  EVERY person has a cellular phone and account right?  Not every household has cable.  Comcast took a lot of DSL customers but that switchover is probably complete.   I like a dedicated ISP at home, but the trend especially among the young seems to be having cellular-only.  5G may enable these devices to be a whole-house hotspot.  Verizon is also offering wireless home internet services now which competes very well with cable on price and speed (without the channel content cost).  I could be wrong but I just like a cellular company better for those reasons.  What's your view on that?

By the way I don't see AT&T, Verizon, T-mobile as equals when it comes to customer choice.  Everyone has an opinion but in my experience Verizon has better coverage in more areas including 5G now. In other words they don't compete strictly on the basis of plan prices and special offers.

------------------------------
JOSHUA

Original Message:
Sent: 03-14-2023 15:53
From: Vinod Nair
Subject: Is there value anywhere?

Hi Joshua - VZ does look like a good value play. At least compared to T-Moble and AT&T. What do you think about comcast? They are trying to enter the same market. Their numbers too look good to me.

------------------------------
vNu

Original Message:
Sent: 03-14-2023 12:42
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vidnod, I'm not overly fixated on dividends, i don't necessarily relate it to value, I have stocks with zero dividend I consider to be excellent values (relative to forward PE and book value).    A dividend certainly doesn't hurt though! Recently I've been all over DOW dog Verizon, buying shares and leap calls (Jan 2025 30's. below $8.00).   Share price $36.80, divi  $2.61;  yield currently 7.1%, Forward PE 8.1

Any determination of value based on the share statistics has be backed up by knowledge that the company's earnings are growing not declining.  Unless they're stable and you're just of the belief earnings multiple alone can provide sufficient growth.  If earnings collapses, that PE that looked so good explodes upward.  With a megacap like this, earnings typically don't grow a whole lot but I'm typically looking for a 1-2 year investment with 30-50% share price growth potential.

------------------------------
JOSHUA

Original Message:
Sent: 03-12-2023 22:10
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Joshua - Just like the mobile companies trying to provide internet services, comcast is trying to expand into mobile. They seem to have wifi hotspots all over the place and they use that infrastructure wherever possible. They are providing mobile services for cheaper price. Not sure if it will catch on.

------------------------------
Thanks &
Good luck with your investments
Vinod | Boston | MA

Original Message:
Sent: 03-14-2023 16:40
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vinod,  the valuation and earnings trend on Comcast looks ok to me, I just like the cellular business a little better.  EVERY person has a cellular phone and account right?  Not every household has cable.  Comcast took a lot of DSL customers but that switchover is probably complete.   I like a dedicated ISP at home, but the trend especially among the young seems to be having cellular-only.  5G may enable these devices to be a whole-house hotspot.  Verizon is also offering wireless home internet services now which competes very well with cable on price and speed (without the channel content cost).  I could be wrong but I just like a cellular company better for those reasons.  What's your view on that?

By the way I don't see AT&T, Verizon, T-mobile as equals when it comes to customer choice.  Everyone has an opinion but in my experience Verizon has better coverage in more areas including 5G now. In other words they don't compete strictly on the basis of plan prices and special offers.

------------------------------
JOSHUA

Original Message:
Sent: 03-14-2023 15:53
From: Vinod Nair
Subject: Is there value anywhere?

Hi Joshua - VZ does look like a good value play. At least compared to T-Moble and AT&T. What do you think about comcast? They are trying to enter the same market. Their numbers too look good to me.

------------------------------
vNu

Original Message:
Sent: 03-14-2023 12:42
From: JOSHUA DONALDSON
Subject: Is there value anywhere?

Vidnod, I'm not overly fixated on dividends, i don't necessarily relate it to value, I have stocks with zero dividend I consider to be excellent values (relative to forward PE and book value).    A dividend certainly doesn't hurt though! Recently I've been all over DOW dog Verizon, buying shares and leap calls (Jan 2025 30's. below $8.00).   Share price $36.80, divi  $2.61;  yield currently 7.1%, Forward PE 8.1

Any determination of value based on the share statistics has be backed up by knowledge that the company's earnings are growing not declining.  Unless they're stable and you're just of the belief earnings multiple alone can provide sufficient growth.  If earnings collapses, that PE that looked so good explodes upward.  With a megacap like this, earnings typically don't grow a whole lot but I'm typically looking for a 1-2 year investment with 30-50% share price growth potential.

------------------------------
JOSHUA

Original Message:
Sent: 03-12-2023 22:10
From: Vinod Nair
Subject: Is there value anywhere?

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

------------------------------
vNu
------------------------------

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

Vinod

Thank you for posing this simple, but fundamental, question.

AAII member comments indicate the consensus believes your question is very prescient in 2023. However, most of the investing community continues to invest in equity markets despite very high valuations. Although many may not understand the concept of "value investing, " their behavior indicates that they expect to obtain "value" through stock appreciation independent of the overall economic and market environment conditions. I am not as sophisticated or erudite as they.

Rather than preach the value of fundamental analysis to the unwashed masses who are surfing the "rad, snarly, totally tubular" waves of today's overpriced market,  I thought I might assist them with a way to evaluate their investment strategy using the most basic indicator I know -- the Buffet Indicator. This market valuation measure may be obscure to many.

So I downloaded some explanatory text and a chart with data from the Federal Reserve FRED database (see below) that provides comparative data to evaluate today's overall market valuation using the latest data available (July 14, 2023).

"The Buffett Indicator, also known as Market Cap to GDP, has gained prominence as a long-term valuation indicator for stocks, largely due to Warren Buffett's endorsement. In a Fortune Magazine interview back in 2001, Buffett referred to it as "probably the best single measure of where valuations stand at any given moment." This statement has drawn attention to the indicator's potential significance in assessing market conditions. The calculation of the Buffett Indicator involves dividing the total market value of all publicly-traded stocks within a country by the country's Gross Domestic Product (GDP). By comparing the stock market's size to the overall economic output, this ratio provides insights into the relative valuation of the market. To illustrate this concept, one common approach is to examine the ratio between the Wilshire 5000 and the GDP of the United States. The Wilshire 5000 is widely regarded as the definitive benchmark for the US equity market, aiming to measure the total market capitalization of all US equity securities with readily available price data. By dividing this market index by the GDP, we can obtain a snapshot of the market's valuation concerning the country's economic performance."  

https://www.longtermtrends.net/market-cap-to-gdp-the-buffett-indicator/

Data Sources

• Federal Reserve Bank of St. Louis: Wilshire 5000 Full Cap Price Index
• Federal Reserve Bank of St. Louis: US Gross Domestic Product

The chart provides the ability to compare current valuations to valuations since 1970, the last 50 years. The curve makes it easy to compare the height and trend of today's curve over history. The labels enable comparisons of 2023 values to 2000 and 2007 values, two periods that preceded market "drawdowns" of over 30%. I did not flag 9 lesser drawdowns below 30%. Anyone can draw their own conclusions.

One of the sources I follow for investing insights is Nick Maggiulli who writes the "Dollars and Cents" blog. He has a different interpretation of these data. See "The Problem with Valuation" @ https://ofdollarsanddata.com/the-problem-with-valuation/ posted July 18, 2023.

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

Thank you for the post, Barry. It certainly adds evidence that the overall market is overvalued. But remember that the Wilshire 5000 is cap weighted, so the big dogs are the ones most likely to be responsible for the altitude. There is still plenty of value to be found in individual smaller companies. Nevertheless, your post does raise concerns about the 5-year future for most cap-weighted funds. 

Vinod

Thank you for posing this simple, but fundamental, question.

AAII member comments indicate the consensus believes your question is very prescient in 2023. However, most of the investing community continues to invest in equity markets despite very high valuations. Although many may not understand the concept of "value investing, " their behavior indicates that they expect to obtain "value" through stock appreciation independent of the overall economic and market environment conditions. I am not as sophisticated or erudite as they.

Rather than preach the value of fundamental analysis to the unwashed masses who are surfing the "rad, snarly, totally tubular" waves of today's overpriced market,  I thought I might assist them with a way to evaluate their investment strategy using the most basic indicator I know -- the Buffet Indicator. This market valuation measure may be obscure to many.

So I downloaded some explanatory text and a chart with data from the Federal Reserve FRED database (see below) that provides comparative data to evaluate today's overall market valuation using the latest data available (July 14, 2023).

"The Buffett Indicator, also known as Market Cap to GDP, has gained prominence as a long-term valuation indicator for stocks, largely due to Warren Buffett's endorsement. In a Fortune Magazine interview back in 2001, Buffett referred to it as "probably the best single measure of where valuations stand at any given moment." This statement has drawn attention to the indicator's potential significance in assessing market conditions. The calculation of the Buffett Indicator involves dividing the total market value of all publicly-traded stocks within a country by the country's Gross Domestic Product (GDP). By comparing the stock market's size to the overall economic output, this ratio provides insights into the relative valuation of the market. To illustrate this concept, one common approach is to examine the ratio between the Wilshire 5000 and the GDP of the United States. The Wilshire 5000 is widely regarded as the definitive benchmark for the US equity market, aiming to measure the total market capitalization of all US equity securities with readily available price data. By dividing this market index by the GDP, we can obtain a snapshot of the market's valuation concerning the country's economic performance."  

https://www.longtermtrends.net/market-cap-to-gdp-the-buffett-indicator/

Data Sources

• Federal Reserve Bank of St. Louis: Wilshire 5000 Full Cap Price Index
• Federal Reserve Bank of St. Louis: US Gross Domestic Product

The chart provides the ability to compare current valuations to valuations since 1970, the last 50 years. The curve makes it easy to compare the height and trend of today's curve over history. The labels enable comparisons of 2023 values to 2000 and 2007 values, two periods that preceded market "drawdowns" of over 30%. I did not flag 9 lesser drawdowns below 30%. Anyone can draw their own conclusions.

One of the sources I follow for investing insights is Nick Maggiulli who writes the "Dollars and Cents" blog. He has a different interpretation of these data. See "The Problem with Valuation" @ https://ofdollarsanddata.com/the-problem-with-valuation/ posted July 18, 2023.

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?

Vinod

Thank you for posing this simple, but fundamental, question.

AAII member comments indicate the consensus believes your question is very prescient in 2023. However, most of the investing community continues to invest in equity markets despite very high valuations. Although many may not understand the concept of "value investing, " their behavior indicates that they expect to obtain "value" through stock appreciation independent of the overall economic and market environment conditions. I am not as sophisticated or erudite as they.

Rather than preach the value of fundamental analysis to the unwashed masses who are surfing the "rad, snarly, totally tubular" waves of today's overpriced market,  I thought I might assist them with a way to evaluate their investment strategy using the most basic indicator I know -- the Buffet Indicator. This market valuation measure may be obscure to many.

So I downloaded some explanatory text and a chart with data from the Federal Reserve FRED database (see below) that provides comparative data to evaluate today's overall market valuation using the latest data available (July 14, 2023).

"The Buffett Indicator, also known as Market Cap to GDP, has gained prominence as a long-term valuation indicator for stocks, largely due to Warren Buffett's endorsement. In a Fortune Magazine interview back in 2001, Buffett referred to it as "probably the best single measure of where valuations stand at any given moment." This statement has drawn attention to the indicator's potential significance in assessing market conditions. The calculation of the Buffett Indicator involves dividing the total market value of all publicly-traded stocks within a country by the country's Gross Domestic Product (GDP). By comparing the stock market's size to the overall economic output, this ratio provides insights into the relative valuation of the market. To illustrate this concept, one common approach is to examine the ratio between the Wilshire 5000 and the GDP of the United States. The Wilshire 5000 is widely regarded as the definitive benchmark for the US equity market, aiming to measure the total market capitalization of all US equity securities with readily available price data. By dividing this market index by the GDP, we can obtain a snapshot of the market's valuation concerning the country's economic performance."  

https://www.longtermtrends.net/market-cap-to-gdp-the-buffett-indicator/

Data Sources

• Federal Reserve Bank of St. Louis: Wilshire 5000 Full Cap Price Index
• Federal Reserve Bank of St. Louis: US Gross Domestic Product

The chart provides the ability to compare current valuations to valuations since 1970, the last 50 years. The curve makes it easy to compare the height and trend of today's curve over history. The labels enable comparisons of 2023 values to 2000 and 2007 values, two periods that preceded market "drawdowns" of over 30%. I did not flag 9 lesser drawdowns below 30%. Anyone can draw their own conclusions.

One of the sources I follow for investing insights is Nick Maggiulli who writes the "Dollars and Cents" blog. He has a different interpretation of these data. See "The Problem with Valuation" @ https://ofdollarsanddata.com/the-problem-with-valuation/ posted July 18, 2023.

Recession around the corner, interest rates going up, cost of doing business expected to go up and profit down. 

Not much different in the fixed income world, unrealized losses piling up, ratings and defaults going down.

Is there a place to hide? Is there any place value is hiding?