I will torment with this forever. Buying quality has worked out better as long as I paid some attention to valuation. I do not believe you win in the end if you pay no mind to valuation, no matter how good the company.
My smartest buys ever were CSCO-INTC-MSFT-PFE in the mid 90s.
My stupidest holds ever were CSCO-INTC-MSFT-PFE about 5 years later. Stupid is harsh so I'll upgrade myself to ignorant but a value investor did warn me. Reckless was rewarded for years so I was wiser than he until I wasn't.
Nortel-Lucent and Motorola were dominant when I started investing. They all pretty much went BK while the value stocks lived on. The widely held price targets on QCOM over 20 yrs ago was $800-1200. Are we there yet? Nope, TSLA has replaced it with a $4K price target.
Value traps will always be value traps. Trash is priced like trash maybe because it is trash? I've made money on MO and T only because I was lucky and didn't buy them 5 years ago. I lost money on XOM because I wasn't lucky. The high yield is well celebrated here while they underperform SPY by a VERY WIDE margin for at least five years. We happen to be up so they are great stocks. I play the game but I try not to fool myself.
If I even have a point it's this is a marathon and our decisions are GREATLY influenced by recency bias and the sometimes random timing of our investments.. Five year charts don't impress me much unless the underlying fundamentals somewhat validate the share price. 90% of the past five years were bull market months.
Valuation WILL matter in the end, but it's not just a matter of looking at next years PE. We'd all own our personal island if it were that simple. This is probably the most heart felt post you will ever get from me on this forum. I am convinced my views are valid. The market does not follow our simple rules for years at a time. The only thing I believe I have figured out in 35 years is how to not get my port killed due to fear, greed and arrogance. I wish I was 25 again.
My smartest buys ever were CSCO-INTC-MSFT-PFE in the mid 90s.
My stupidest holds ever were CSCO-INTC-MSFT-PFE about 5 years later. Stupid is harsh so I'll upgrade myself to ignorant but a value investor did warn me. Reckless was rewarded for years so I was wiser than he until I wasn't.
Nortel-Lucent and Motorola were dominant when I started investing. They all pretty much went BK while the value stocks lived on. The widely held price targets on QCOM over 20 yrs ago was $800-1200. Are we there yet? Nope, TSLA has replaced it with a $4K price target.
Value traps will always be value traps. Trash is priced like trash maybe because it is trash? I've made money on MO and T only because I was lucky and didn't buy them 5 years ago. I lost money on XOM because I wasn't lucky. The high yield is well celebrated here while they underperform SPY by a VERY WIDE margin for at least five years. We happen to be up so they are great stocks. I play the game but I try not to fool myself.
If I even have a point it's this is a marathon and our decisions are GREATLY influenced by recency bias and the sometimes random timing of our investments.. Five year charts don't impress me much unless the underlying fundamentals somewhat validate the share price. 90% of the past five years were bull market months.
Valuation WILL matter in the end, but it's not just a matter of looking at next years PE. We'd all own our personal island if it were that simple. This is probably the most heart felt post you will ever get from me on this forum. I am convinced my views are valid. The market does not follow our simple rules for years at a time. The only thing I believe I have figured out in 35 years is how to not get my port killed due to fear, greed and arrogance. I wish I was 25 again.